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EUR/USD Vulnerable as ECB Preps Covered-Bond Purchase Program

EUR/USD Vulnerable as ECB Preps Covered-Bond Purchase Program

David Song, Strategist

Talking Points:

- EUR/USD Threatens Bullish Momentum as ECB Pursues Covered-Bond Purchases.

- USD/CAD Topside Targets Remain Favored Ahead of BoC Policy Meeting.

- USDOLLAR Bearish RSI Momentum Remains in Focus Amid String of Lower-Highs.

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EUR/USD Daily Chart
  • EUR/USD may enter a near-term topping process as the European Central Bank (ECB) gets ready to launch covered-bond purchase program in the coming days.
  • With the lack of momentum to push above the 1.2900 handle (61.8% retracement), a bearish break in the Relative Strength Index (RSI) may highlight a lower-high in EUR/USD.
  • Continue to see increased volatility in the DailyFX Speculative Sentiment Index (SSI) as retail-crowd turns net-short on EUR/USD, with the ratio currently standing at -1.02.


USD/CAD Daily Chart
  • Bullish outlook remains favored for USD/CAD as Canada’s Consumer Price Index (CPI) slows to an annualized 2.0% in September.
  • Despite the stickiness in core inflation, the Bank of Canada (BoC) is widely expected to retain the current policy as Governor Stephen Poloz sees a period of interest rate stability.
  • Will continue to watch former resistance zones for new support, but the next topside objective comes in around the 1.1400 pivot to 1.1430 (1.618% expansion).

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Read More:

USD Failure?

Dollar Hobbled, Equities Bolstered by Bullard’s QE Comments

USDOLLAR(Ticker: USDollar):





Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index






EUR/USD Vulnerable as ECB Preps Covered-Bond Purchase ProgramUSDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Despite the ongoing series of lower-highs, the Dow Jones-FXCM U.S. Dollar Index may regain its footing should the RSI break out of the bearish formation.
  • May see growing arguments to delay the Fed’s QE exit as the headline reading for U.S. inflation is expected to slow to an annualized 1.6% from 1.7% in August.
  • Nevertheless, will continue to watch the bullish flag pattern as the U.S. dollar continues to search for key support; 10,869 (78.6% retracement) to 10,887 (61.8% retracement) remains on our radar.

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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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