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Euro Vulnerable to ECB, Greek Election- AUD to Face China 4Q GDP

Euro Vulnerable to ECB, Greek Election- AUD to Face China 4Q GDP

David Song, Strategist

Talking Points:

- EUR/USD Downside Targets Remain Favored Ahead of ECB Meeting, Greek Elections

- AUD/USD Range Vulnerable to Slowing China 4Q GDP.

- USDOLLAR Continues to Track Sideways Ahead of CPI, U. of Michigan Confidence.

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EUR/USD

EUR/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • EUR/USD extends decline and remains at risk for a further decline especially as the Relative Strength Index (RSI) pushes deeper into oversold territory.
  • Beyond expectations for the European Central Bank (ECB) to announce a QE program range from EUR 500B to EUR 1T, the Greek elections may also undermine the outlook for the single currency should the region struggle to form a government.
  • Even though the retail crowd remains net-long EUR/USD, DailyFX Speculative Sentiment Index (SSI) narrows going into the weekend, with the ratio currently standing at +1.26.

AUD/USD

AUD/USD Daily Chart
  • Will continue to watch the short-term string of higher highs & lows in AUD/USD, but may continue to face range-bound prices in the week ahead should it fail to close above 0.8210-20 (23.6% retracement)
  • Despite the light economic docket for Australia, China’s 4Q Gross Domestic Product (GDP) report may drag on the higher-yielding currency as the growth rate is expected to slow to an annualized 7.2% from 7.3% during the three-months through September.
  • Close above 0.8210-20 should spark a larger rebound and may expose 0.8310 (78.6% expansion) to 0.8320 (38.2% retracement).

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Read More:

Assessing the Aftermath of SNB Shocker from EUR’s Perspective

AUDUSD Rally at Risk- Scalps Target 8300 Resistance

USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index11675.7811714.2811620.440.36183.92%
USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Despite the stronger-than-expected headline reading for U.S. inflation, looks as though the Dow Jones-FXCM U.S. Dollar will preserve the opening monthly range for now.
  • Topside targets remain favored amid as long as the greenback continues to close above 11,623 (23.6% retracement), while the RSI retains the bullish momentum.
  • Will continue to watch support and resistance on USDOLLAR as the greenback looks poised to face range-bound prices going into the market holiday on Monday.

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ReleaseGMTExpectedActual
Consumer Price Index (MoM) (DEC)13:30-0.4%-0.4%
Consumer Price Index (YoY) (DEC)13:300.7%0.8%
Consumer Price Index ex Food and Energy (MoM) (DEC)13:300.1%0.0%
Consumer Price Index ex Food and Energy (YoY) (DEC)13:301.7%1.6%
Consumer Price Index n.s.a. (DEC)13:30234.611234.813
Consumer Price Index Core s.a. (DEC)13:30239.635239.339
Industrial Production (MoM) (DEC)14:15-0.1%-0.1%
Capacity Utilization (DEC)14:1579.9%79.7%
Manufacturing Production (SIC) (DEC)14:150.2%0.3%
U. of Michigan Confidence (JAN P)15:0094.198.2
Total Net TIC Flows (NOV)21:00--
Net Long-Term TIC Flows (NOV)21:00--

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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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