Talking Points:
- GBP/USD Retail Crowd Flips Net-Long Following Dismal U.K. CPI Report.
- EUR/USD Fails to Retain Bullish Structure as ECB Reinforces Dovish Forward-Guidance.
- USDOLLAR Downside Targets Remain Favored on Bearish Formation, Dismal Data.
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Chart - Created Using FXCM Marketscope 2.0
- GBP/USD remains at risk for a further pullback following the failed attempts to close above 1.5780 (38.2% retracement), while the pair continues to carve a series of lower highs & lows this week.
- Despite the unexpected slowdown in the U.K. Consumer Price Index (CPI), Bank of England (BoE) Governor Mark Carney anticipates to see stronger price growth towards the end of the year; will stay constructive on GBP/USD as long as the Relative Strength Index (RSI) preserves the bullish momentum carried over from March.
- BoE Minutes are widely expected to show a unanimous vote, but the DailyFX Speculative Sentiment Index (SSI) shows retail crowd flipped net-long GBP/USD following the dismal inflation print, with the ratio currently standing at +1.12.
EUR/USD
- EUR/USD faces a greater risk of carving a near-term top in May following the failed attempted to test the February high (1.1532), while price & RSI struggle to retain the bullish formations.
- Dovish rhetoric from European Central Bank’s (ECB) Benoit Coeure & Christian Noyer encourages a long-term bearish outlook for the single currency as the Governing Council retains a highly dovish tone for monetary policy.
- Break/close below 1.1120 (61.8% retracement) may open up former resistance around 1.0970 (38.2% expansion) to 1.0990 (50% retracement).
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USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 11804.79 | 11820.52 | 11719.38 | 0.65 | 139.72% |
Chart - Created Using FXCM Marketscope 2.0
- Dow Jones-FXCM U.S. Dollar looks poised for a further advance as it breaks out of the downward trending channel; Federal Open Market Committee (FOMC) Minutes may set the tone ahead of the Consumer Price Index (CPI) as market participants weigh the outlook for monetary policy.
- Marked expansion in Housing Starts & Building Permits may align with Fed expectations and highlight a stronger recovery for the second-quarter.
- Waiting for a push above the Fibonacci overlap around 11,826 (61.8% expansion) to 11.843 (38.2% retracement) to reinforce a bullish outlook for the dollar.
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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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