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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 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.


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):





Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index






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.

Join DailyFX on Demand for Real-Time SSI Updates!





Chicago Fed National Activity Index (AUG)




Existing Home Sales (AUG)




Existing Home Sales (MoM) (AUG)




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


Fed's Narayana Kocherlakota Speaks on Monetary Policy


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--- Written by David Song, Currency Analyst

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

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