Talking Points:
- EUR/USD Slips to Fresh Monthly Low as ECB Endorses Dovish Forward-Guidance.
- USD/CAD Rally to Gather Pace on Slowing Canada Inflation.
- USDOLLAR Eyes June High (12,043) Ahead of U.S. CPI, U. of Michigan Confidence.
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Chart - Created Using FXCM Marketscope 2.0
- EUR/USD slips to a fresh monthly low 1.0853 as the European Central Bank (ECB) retains its pledge to ‘fully implement’ its asset-purchase program until at least September 2016; remains at risk for a further decline as the bearish momentum in the Relative Strength Index (RSI) gathers pace.
- Despite the dovish rhetoric, it seems as though the bar remains high for the central bank to implement more non-standard measures as ECB President Mario Draghi highlights the positive data prints coming out of the monetary union.
- Nevertheless, the DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-short EUR/USD since March 9, with the ratio continuing to come off of extremes as it sits at -1.17.
USD/CAD
- USD/CAD remains at risk for a further advance following the Bank of Canada (BoC) rate cut amid the growing deviation in the policy outlook; will keep a close eye on the topside targets as the RSI pushes deeper into overbought territory.
- Canadian dollar may regain its footing over the next 24-hours of trading as the headline reading for the Consumer Price Index (CPI) is expected to show an uptick in June, but weakness in the core rate of inflation may put increased pressure on the BoC to implement additional monetary support as the central bank cuts its 2015 growth forecast.
- Closing price above near-term resistance around 1.2940 (78.6% retracement) to 1.2950 (50% expansion) will bring up the next topside objective around 1.3080 (61.8% expansion).
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Read More:
Price & Time: 6-Year High In USD/CAD
Key EURUSD Levels to Know Ahead of the ECB, US CPI
USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 12005.95 | 12032.88 | 11995.46 | 0.04 | 66.33% |
Chart - Created Using FXCM Marketscope 2.0
- Dow Jones-FXCM U.S. Dollar advances to a fresh monthly high (12,032) and may continue to work its way towards the June high (12,043) as Fed Chair Janet Yellenpledges to remove the zero-interest rate policy (ZIRP) in 2015.
- Despite forecasts for a small downtick in the U. of Michigan Confidence survey, an uptick in the headline & core U.S. CPI may further boost the appeal of the greenback as the Fed remains confident in achieving the 2% inflation target over the policy horizon.
- Still need a break/close above the 12,049 (78.6% retracement) region to see a run at the 2015 high (12,162).
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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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