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  • Modest risk-on response to the #FOMC statement, echoing baseline bets that a taper announcement is due in November. Focus now on #Powell and how his comments might color the outlook
  • Well the Powell press conference is going to be interesting. https://t.co/FCMdJWyuIc
  • $USD weekly lows, presser in 15m https://t.co/e7mooUHCy3 https://t.co/TKbt9r0VPJ
  • Heads Up:🇺🇸 Fed Press Conference due at 18:30 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-09-22
  • So no date on taper, which is bullish but now an expected hike in 22, which takes some of the shine off of today's punt https://t.co/OM6dGbgiRM
  • I'll also note that in 2022, the four Fed officials that are expected to rotate in to the board with a vote are notable hawks. https://t.co/kRMmmA5Id8
  • #FOMC: If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted $USD $SPX $XAUUSD #trading
  • Federal Reserve: - We will keep Fed Funds Rate where it is until labor market has reached full employment and inflation has reached 2% - Indicators of economic activity and employment have continued to strengthen
  • #FOMC Projections .. Bumped up Inflation expectations and softened employment expectations (higher #unemployment) . . #Fed https://t.co/jBR44AUn5m
  • Here is the Change in the #FOMC dot plot from June 16th to today. There are 9 participants forecasting at least one rate hike in 2022 and 9 that expect to hold. They've also added the 2024 forecast, separated from the 'Long Run'. https://t.co/QIkZTBK5SG
Retail FX Remains Net-Short EUR/USD Ahead of Euro-Zone CPI

Retail FX Remains Net-Short EUR/USD Ahead of Euro-Zone CPI

David Song, Strategist

Talking Points:

- Retail FX Remains Net-Short EUR/USD Ahead of Euro-Zone CPI.

- USDOLLAR Struggles Amid Mixed Data; Fed Chair Janet Yellen on Tap.

Avoid the pitfalls of trading by steering clear of classic mistakes. Review these principles in the "Traits of Successful Traders" series.

EUR/USD

EUR/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • EUR/USD stands at risk for a larger advance over the coming days as the pair breaks out of the downward trending channel, and largely retains the advance following the European Central Bank’s (ECB) March 10 interest rate decision.
  • Even though the headline reading for the Euro-Zone’s Consumer Price Index (CPI) is anticipated to highlight negative price growth in March, an uptick in the core rate of inflation may dampen bearish bets for the single-currency as it limit’s the Governing Council’s scope to implement more non-standard measures.
  • Ongoing closes above 1.1090 (50% retracement) to 1.1110 (50% retracement) may spur a move towards 1.1341 (March high) followed by 1.1375 (2016 high).
EUR/USD SSI
  • Despite the near-term breakout, the DailyFX Speculative Sentiment Index (SSI) shows the retail FX crowd remains net-short EUR/USD since March 10, with the ratio hitting an extreme following the ECB rate decision as it slipped below -2.00.
  • Will keep a close eye on market participation heading into the end of month/quarter as open interest stands 1.2% above the monthly average, but may see position adjustments produce choppy to whipsaw-like price action as the long-term outlook for EUR/USD remains tilted to the downside amid the diverging paths for monetary policy.

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USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

11981.88

12030.04

11972.29

-0.26

92.91%

Retail FX Remains Net-Short EUR/USD Ahead of Euro-Zone CPIUSDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • The USDOLLAR struggles to hold its ground amid the mixed data prints, with the core Personal Consumption Expenditure (PCE), the Fed’s preferred gauge for inflation, missing market expectations as the figure held steady at an annualized 1.7% in February.
  • May see increased interest surrounding the Non-Farm Payrolls (NFP) report as the U.S. economy approaches ‘full-employment,’ but may see fresh comments from Fed Chair Janet Yellen spark increased volatility in the greenback as market participants weigh the timing of the next rate-hike.
  • Nevertheless, the USDOLLAR appears to have made a failed attempt to push back above 12,050 (78.6% retracement) to 12,082 (61.8% expansion) as it fails to retain the near-term series of higher highs & lows, with a break below 12,050 (78.6% retracement) to 12,082 (61.8% expansion) opening up the door for a move back towards 11,826 (61.8% expansion) to 11,843 (38.2% retracement).
Retail FX Remains Net-Short EUR/USD Ahead of Euro-Zone CPI

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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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