Talking Points:
- USDOLLAR Struggles Amid Soft CPI Report- U. of Michigan on Tap.
- NZD/USD Vulnerable to Slowing China GDP Amid Failed Test of March High.
USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 11878.81 | 11919.14 | 11864.07 | -0.06 | 95.72% |
Chart - Created Using FXCM Marketscope 2.0
- The USDOLLAR pares the overnight advance following the softer-than-expected U.S. Consumer Price Index (CPI) report, with both the headline and the core rate of inflation narrowing in March; may increase the Fed’s scope to further delay the normalization cycle.
- Nevertheless, the near-term series of higher highs & lows may encourage a larger rebound especially as the U. of Michigan Confidence survey is rebound to 92.0 from 91.0 in March.
- Despite the bearish tilt in the Relative Strength Index (RSI), the failed attempts to close 11,826 (61.8% expansion) to 11,843 (38.2% retracement) may highlight a larger rebound, with a closing price above 11,951 (38.2% expansion) to 11,965 (23.6% retracement) raising the risk for a further near-term advance in the USDOLLAR.
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Chart - Created Using FXCM Marketscope 2.0
- NZD/USD appears to have marked a failed run at the March high (0.6965), with the New Zealand dollar at risk for further weakness as the slowdown in the region’s Purchasing Manager Index (PMI) for manufacturing fuels bets for additional monetary support.
- With China’s Gross Domestic Product (GDP) report anticipated to highlight a slower rate of growth for the first-quarter of 2016, the slowdown in global growth may encourage the Reserve Bank of New Zealand (RBNZ) to further embark on its easing cycle as Governor Graeme Wheeler endorses a dovish outlook for monetary policy.
- In light of the recent weakness, the next downside hurdle comes in around 0.6690 (161.8% expansion) to 0.6710 (50% retracement), with interim support coming in around 0.6570 (100% expansion) to 0.6590 (38.2% retracement).
- The DailyFX Speculative Sentiment Index (SSI) shows increased volatility in retail positioning, with the FX crowd flipping back net-short NZD/USD on April 12.
- The ratio currently stands at -1.13 as 47% of traders are long, with long positions narrowing 22.4% ahead of the weekend, while open interest stands 6.4% below the monthly average.
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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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