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USDOLLAR Stands at Key Juncture Ahead of 4Q GDP Report

USDOLLAR Stands at Key Juncture Ahead of 4Q GDP Report

David Song,

Talking Points:

- USDOLLAR Under Pressure- Downside Targets in Focus Ahead of 4Q GDP Report.

- USD/JPY Outlook Hinges on BoJ Rate Decision- Will Governor Kuroda Surprise?

- NZDUSD Range Unscathed by RBNZ; China PMI’s, New Zealand Employment on Tap.

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USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index12204.7712250.4312197.2-0.38141.04%
USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Despite the limited market reaction to the Federal Open Market Committee (FOMC) interest rate decision, the Dow Jones-FXCM U.S. Dollar struggles to hold its ground following the 5.1% decline in demand for U.S. Durable Goods, with the greenback at a risk for a larger pullback should the Relative Strength Index (RSI) fail to retain the bullish formation from back in August.
  • With the advance 4Q Gross Domestic Product (GDP) report anticipated to show the U.S economy growing an annualized 0.8% following the 2.0% expansion during the three-months through September, a marked slowdown in the growth rate accompanied by a downtick in the core Personal Consumption Expenditure (PCE) may drag on interest rate expectations as Fed remains ‘data dependent.’
  • Failure to hold/close above 12,176 (78.6% expansion) to 12,219 (November high) may open up the next downside target around 12,049 (78.6% retracement) to 12,082 (61.8% expansion).

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USD/JPY Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Even though the Bank of Japan (BoJ) keeps the door open to further expand its asset-purchase program, more of the same from Governor Haruhiko Kuroda and Co. may spark a similar reaction as the December 18 interest rate decision as the central bank continues to defy market expectations and endorses a wait-and-see approach.
  • Despite speculation for additional monetary support, Japan’s Consumer Price Index (CPI) report may encourage the BoJ to retain its current policy throughout the first-half of 2016 as the core-core rate of inflation is anticipated to hold at an annualized 0.9% in December; nevertheless, dollar-yen may face a larger rebound in the days ahead as the RSI carves a bullish formation, with a push/close above 119.00 (161.8% expansion) to 119.10 (38.2% expansion) to open up the next major topside target around 120.10 (61.8% retracement) to 120.20 (50% expansion).
  • DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long USD/JPY since December 2, but the ratio continues to come off of recent extremes as it narrows to +1.47, with 60% of traders now long.

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NZD/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • NZD/USD may continue to congest over the near-term as we get more of the same from the Reserve Bank of New Zealand (RBNZ), with Governor Graeme Wheeler keeping the door open to implement lower borrowing-costs.
  • The Purchasing Managers Indices (PMI) coming out of China along with New Zealand’s Employment report on tap for the week ahead may provide a near-term directional bias for NZD/USD as market participants gauge the easing cycle in the Asia-Pacific region.
  • With NZD/USD largely capped around 0.6570 (100% expansion) to 0.6590 (38.2% retracement), will keep a close eye around 0.6370 (50% retracement) to 0.6400 (61.8% retracement) for support.

Read More:

GBP/USD – All About 1.4400

AUDJPY Following 2016 Trade Plan- Time to Reload

USD/JPY Technical Analysis: Upside Risks Heightened Before BoJ (Levels)

COT-Trend Traders Hold Record Net Short Position in Copper

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--- Written by David Song, Currency Analyst

To contact David, e-mail Follow me on Twitter at @DavidJSong.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.