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EUR/USD Downside Targets in Focus- AUD/USD Eyes Key Fib Retracement

EUR/USD Downside Targets in Focus- AUD/USD Eyes Key Fib Retracement

David Song, Strategist

Talking Points:

- EUR/USD Slips to Fresh Monthly Low (1.2820) as ECB President Draghi Reiterates Dovish Tone

- AUD/USD Eyes 78.6% Retracement of 2014 Range Ahead of China PMI, RBA Rhetoric

- Bullish USDOLLAR Setup Remains in Play Even as Fed’s William Dudley Favors 2015 Rate Hike

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EUR/USD

EUR/USD Downside Targets in Focus- AUD/USD Eyes Key Fib Retracement
  • EUR/USD dips to a fresh monthly low of 1.2820 as European Central Bank (ECB) President Mario Draghi sees further expansion in balance sheet and remains prepared to take more action as needed.
  • Bearish outlook remains favored as Governing Council plans to provide a more detailed asset-backed securities (ABS) purchase plan at the October 2 meeting; next key region of interest comes in around 1.2710 (78.6% expansion) to 1.2725 (23.6% retracement).
  • DailyFX Speculative Sentiment Index (SSI) continues to favor a further decline in the EUR/USD as there appears to be a further buildup of the net-long position, with the ratio currently standing at +1.53.

AUD/USD

EUR/USD Downside Targets in Focus- AUD/USD Eyes Key Fib Retracement
  • Downside targets remain favored for AUD/USD as the Relative Strength Index (RSI) retains bearish momentum & dips back into oversold territory.
  • Next key downside objective is 88.30-40, 78.6% Fibonacci retracement of the 2014 range- break & close below raises risk of seeing a full retracement of the rebound from January (0.8659).
  • China’s HSBC Purchasing Manager Index (PMI) may heighten the bearish sentiment surrounding the Australian dollar should the data print dampen the outlook for global trade.

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Read More:

Price & Time: Euro Volume & Sentiment Becoming Worrisome

Precious Metals Pummeled, Crude and Copper Slump Ahead Of China Data

USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10945.64

10956.01

10913.18

0.01

88.21%

EUR/USD Downside Targets in Focus- AUD/USD Eyes Key Fib RetracementEUR/USD Downside Targets in Focus- AUD/USD Eyes Key Fib Retracement

Chart - Created Using FXCM Marketscope 2.0

  • Dow Jones-FXCM U.S. Dollar Index presses to a fresh yearly high of 10,956 despite the slew of dismal data, while New York Fed President William Dudley favors rate hike in 2015.
  • Despite the key speeches from the group of central bank doves, the technical outlook continues to favor the topside as long as price & RSI retain the bullish trend.
  • Will be watching 10,989 (50.0% expansion) to 11,009 (July 2013 high) ahead of the Fed’s next policy meeting on August 29 amid the pickup in interest rate expectations.

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Release

GMT

Expected

Actual

Chicago Fed National Activity Index (AUG)

12:30

0.33

-0.21

Existing Home Sales (AUG)

14:00

5.20M

5.05M

Existing Home Sales (MoM) (AUG)

14:00

1.0%

-1.8%

Fed's William Dudley Speaks on U.S. Economy

14:05

Fed's Narayana Kocherlakota Speaks on Monetary Policy

23:30

Click Here for the DailyFX Calendar

--- Written by David Song, Currency Analyst

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

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