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Narrowing EUR/USD Range in Focus; AUD/USD Lower-High in Place?

Narrowing EUR/USD Range in Focus; AUD/USD Lower-High in Place?

David Song, Strategist

Talking Points:

- EUR/USD Continues to Carve Narrowing Range Ahead of Euro-Zone 3Q GDP.

- AUD/USD Rebound to Face Long-Dating Bearish RSI Momentum.

- USDOLLAR Wedge/Triangle Remains in Play Ahead of Retail Sales, U. of Michigan Confidence.

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EUR/USD

EUR/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • The Euro-Zone’s 3Q Gross Domestic Product (GDP) report may act as a key fundamental trigger for EUR/USD amid the narrowing range in the exchange rate; long-term outlook remains bearish.
  • Despite expectations of seeing a rebound in the euro-area, long-term outlook for EUR/USD remains bearish as the European Central Bank (ECB) prepares to implement more non-standard measures in December.
  • Seeing increased volatility in the DailyFX Speculative Sentiment Index (SSI) as retail-crowd as now turned net-short on EUR/USD, with the ratio currently holding at -1.04.

AUD/USD

AUD/USD Daily Chart
  • Despite the fresh monthly high, AUD/USD is coming into a key juncture as it approaches the 0.8760-70 zone (61.8% retracement) along with trendline resistance on the Relative Strength Index (RSI).
  • Will retain a bearish outlook & look for another lower-high in AUD/USD as long as the momentum indicator retains the downward trend from earlier this year.
  • Long-term outlook for AUD/USD remains bearish amid the growing deviation in the policy outlook, especially with the Reserve Bank of Australia (RBA) jawboning the higher-yielding currency.

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Read More:

Price & Time: GBP/USD Not in the "Free & Clear" Just Yet

Australian Dollar Drops as RBA Official Threatens FX Intervention

USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

11259.89

11270.64

11239.54

0.05

51.53%

Narrowing EUR/USD Range in Focus; AUD/USD Lower-High in Place?USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • The wedge/triangle formation in the Dow Jones-FXCM U.S. Dollar Index continues to suggest a continuation of the longer-term trend, but will keep a close eye on the RSI as the bearish divergence remains in play.
  • A rebound in U.S. Retail Sales along with another uptick in U. of Michigan Confidence may heighten the bullish sentiment surrounding the greenback as New York Fed President William Dudley, a permanent voting member on the FOMC, sees scope to remove the zero-interest rate policy (ZIRP) in mid-2015.
  • Need to see the RSI break out of the bearish formation to look for a further advance in USDOLLAR, with the next topside objectives coming in around 11,312 (78.6% retracement) and 11,351 (78.6% expansion).

Join DailyFX on Demand for Real-Time SSI Updates!

Release

GMT

Expected

Actual

Initial Jobless Claims (NOV 8)

13:30

280K

290K

Continuing Claims (NOV 1)

13:30

2347K

2392K

JOLTS Job Openings (SEP)

15:00

4800

4735

Monthly Budget Statement (OCT)

19:00

-$117.0B

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.

To be added to David's e-mail distribution list, please follow this link.

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