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JPY Vulnerable to Slowing Japan CPI- ECB & RBA Rhetoric in Focus

JPY Vulnerable to Slowing Japan CPI- ECB & RBA Rhetoric in Focus

David Song, Strategist

Talking Points:

- EUR/USD Risks Further Losses on Dovish ECB Draghi; RSI Remains in Focus

- USD/JPY Topside Targets Favored on Slowing Japan Consumer Price Inflation

- USDOLLAR Climbs to Fresh 2014 High (10,941) as Fed’s Fisher Favors Reducing Reinvestment

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EUR/USD

JPY Vulnerable to Slowing Japan CPI- ECB & RBA Rhetoric in Focus
  • EUR/USD remains at risk for a further decline as Relative Strength Index (RSI) largely retains bearish momentum; move back into oversold territory may highlight a further decline .
  • With European Central Bank (ECB) President Mario Draghi scheduled to speak next week, may see expectations for a larger asset-back securities (ABS) purchase program amid the dismal take-up of the targeted long-term refinancing operations (T-LTRO).
  • DailyFX Speculative Sentiment Index (SSI) reinforces bearish outlook for EUR/USD as the ratio currently stands at +1.47.

USD/JPY

JPY Vulnerable to Slowing Japan CPI- ECB & RBA Rhetoric in Focus
  • Topside targets remain favored for USD/JPY as RSI retains bullish momentum & pushes deeper into overbought territory.
  • Japan’s Consumer Price Index (CPI) may heighten bets of seeing the Bank of Japan (BoJ) further expand its asset-purchase program at the October 7 policy meeting.
  • Next topside target comes in around 109.65 (100% expansion) to the 110.00 pivot.

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Read More:

Gold Near Bottom of Range or About to Break Down?

Volume Figures Not Supporting Most Recent Leg Down in Euro

USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10940.53

10941.73

10874.41

0.48

141.07%

JPY Vulnerable to Slowing Japan CPI- ECB & RBA Rhetoric in FocusJPY Vulnerable to Slowing Japan CPI- ECB & RBA Rhetoric in Focus

Chart - Created Using FXCM Marketscope 2.0

  • Dow Jones-FXCM U.S. Dollar Index climbs to a fresh monthly high of 10,941 despite the weaker-than-expected print for U.S. Leading Index.
  • Appears as though there’s a growing dissent within the Federal Open Market Committee (FOMC) as voting member Richard Fisher favors reducing reinvestment before raising the benchmark interest rate.
  • Next topside objective comes in around 10,989 (50.0% expansion) to 11,009 (July 2013 high).

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Release

GMT

Expected

Actual

Leading Index (AUG)

14:00

0.4%

0.2%

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--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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