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EUR/USD Eyes Monthly Low as ECB Draghi Hints at QE- CPI in Focus

EUR/USD Eyes Monthly Low as ECB Draghi Hints at QE- CPI in Focus

David Song, Strategist

Talking Points:

- EUR/USD Breaks Weekly Opening Low as ECB President Draghi Hints at QE.

- USD/CAD Threatens Bullish RSI Momentum on Strong Canada CPI.

- USDOLLAR to Face Larger Pullback as RSI Divergence Continues to Take Shape .

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EUR/USD

EUR/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • EUR/USD slips to fresh weekly low of 1.2404 as European Central Bank (ECB) President Mario Draghi pledges to implement more non-standard measures should the current policy fail to boost growth & inflation.
  • Euro remains at risk for a further decline next week as the Euro-Zone Consumer Price Index (CPI) is expected to slow further in November.
  • Seeing increased volatility in the DailyFX Speculative Sentiment Index (SSI) as retail crowd turns net-long EUR/USD today, with the ratio currently standing at +1.24.

USD/CAD

USD/CAD Daily Chart
  • USD/CAD looks poised for a larger correction as Canada CPI beats market expectations, while the Relative Strength Index (RSI) struggles to retain the bullish momentum from back in September.
  • Nevertheless, will look for a resumption of the series of higher highs & lows as the Bank of Canada (BoC) retains a wait-and-see approach; will keep a close eye on Canada’s 3Q Gross Domestic Product (GDP) report as the economy is expected to grow an annualized 2.1% after expanding 3.1% during the three-months through June.
  • Next downside region of interest comes in around 1.1155 (78.6% retracement) to 1.1165 (23.6% expansion).

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Read More:

Scalping the AUDUSD Correction- Longs Favored Above 8565

Time to Bet on the SNB?

USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

11321.61

11339.42

11286.29

0.07

83.08%

EUR/USD Eyes Monthly Low as ECB Draghi Hints at QE- CPI in FocusUSDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Dow Jones-FXCM U.S. Dollar Index may face a larger pullback amid the ongoing series of failed attempts to close above 11,312 (78.6% retracement); will wait for a bullish RSI break to revert back to the approach of buying dips in the greenback.
  • May see the preliminary 3Q GDP report undermine the bullish sentiment surrounding the USDOLLAR as market participants looks for a downward revision to 3.3% from 3.5%; will also keep a close eye on Personal Income & the Personal Consumption Expenditure (PCE) amid the subdued outlook for inflation.
  • As the failure to close above 11,312 (78.6% retracement) to 11,351 (78.6% expansion) raises the risk for a near-term top, will keep an eye on former resistance around 11,120 (161.8% expansion) to 11,138 (61.8% expansion) for initial support.

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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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