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EUR/USD Rebound Vulnerable to ECB’s 2017 Forecasts- 1.1300 in Focus

EUR/USD Rebound Vulnerable to ECB’s 2017 Forecasts- 1.1300 in Focus

David Song, Strategist

Talking Points:

- EUR/USD Rebound Mired by ECB Easing Cycle- Bearish Momentum Remains in Play.

- AUD/USD Range Vulnerable to Dovish RBA, Dismal 4Q GDP Report.

- USDOLLAR Topside Targets Favored Ahead of NFPs as Bearish Momentum Falters.

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EUR/USD

EUR/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Looks as though EUR/USD will continue to close above 1.1185 (23.6% expansion) to 1.1210 (61.8% retracement), but will retain the approach to ‘sell-bounces’ in EUR/USD as the Relative Strength Index (RSI) retains the bearish momentum.
  • Updated forecasts along with the forward-guidance for monetary policy will be largely in focus as the European Central Bank (ECB) prepares to launch its quantitative-easing (QE) program.
  • DailyFX Speculative Sentiment Index (SSI) shows retail crowd has flipped back to net-short EUR/USD going into the end of the month, with the ratio currently holding at -1.02.

AUD/USD

AUD/USD Daily Chart
  • AUD/USD looks poised to retain the range-bounce action ahead of the Reserve Bank of Australia (RBA) interest rate decision on March 3 amid the string of closes above 0.7780 (23.6% retracement).
  • Seeing mixed speculation for a further reduction in borrowing-costs as 18 of the 29 economists polled forecast a 25bp rate cut.
  • With the near-term bullish RSI momentum in play, key topside level of interest comes in around former support at 0.8020 (38.2% expansion) to 0.8040 (61.8% retracement).

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Read More:

USD/JPY Scalp Targets 119.64 Resistance Ahead of GDP

The Weekly Volume Report: USD Pushes Higher But Still Waiting on Volume

USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

11825.92

11834.09

11803.2

-0.02

56.51%

EUR/USD Rebound Vulnerable to ECB’s 2017 Forecasts- 1.1300 in FocusUSDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Dow Jones-FXCM U.S. Dollar outlook remains bullish going into March as it retains the upward trending channel carried over from July 2014; topside targets favored following break of bearish RSI momentum.
  • The stronger-than-expected 4Q GDP print may fuel expectations for a very robust Non-Farm Payrolls (NFP) report, but we will keep a close eye on the wage growth figures especially as the Fed remains in no rush to normalize monetary policy.
  • Still favor the approach to ‘buy dips’ in USDOLLAR, with the next topside target coming in around 11,901 (78.6% expansion).

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Release

GMT

Expected

Actual

Gross Domestic Product (Annualized) (QoQ) (4Q S)

13:30

2.0%

2.2%

Personal Consumption (4Q S)

13:30

4.3%

4.2%

GDP Price Index (4Q S)

13:30

0.0%

0.1%

Core Personal Consumption Expenditure (4Q S)

13:30

1.1%

1.1%

ISM Milwaukee (FEB)

14:00

54.00

50.32

Chicago Purchasing Manger Survey (FEB)

14:45

58.0

45.8

Pending Home Sales (MoM) (JAN)

15:00

2.0%

1.7%

Pending Home Sales n.s.a (YoY) (JAN)

15:00

8.7%

6.5%

U. of Michigan Sentiment (FEB F)

15:00

94.0

95.4

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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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