We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
GBP/USD
Mixed
USD/JPY
Mixed
Gold
Bearish
Oil - US Crude
Mixed
Bitcoin
Bearish
More View more
Real Time News
  • CDS spreads on South Korean sovereign bonds up 4.65 basis points from #coronavirus fear pandemic
  • $USD Forecast: US Dollar Drops on Fed Cuts, Consumer Confidence Eyed Full Analysis: https://www.dailyfx.com/forex/fundamental/us_dollar_index/usd_trading_today/2020/02/24/usd-forecast-us-dollar-drops-on-fed-cuts-consumer-confidence-eyed.html #Forex #FX #Trading #FOMC #DXY https://t.co/Cv7j8FHN2n
  • Nikkei Futures down over 4% following the brutal US session
  • RT @ZabelinDimitri: Feb 24: - Trump meets with Modi - German🇩🇪 IFO business confidence - New Zealand🇳🇿 retail sales - China🇨🇳 may announc…
  • The $JPY has lost out to a broadly resurgent US Dollar, with a clearly dwindling band of Yen bulls left to hope that the most recent rise has become overextended. Get your market update from @DavidCottleFX here:https://t.co/7Ndm5jiOi7 https://t.co/ikXioYKa1S
  • The markets have not been this dovish on the #Fed since October with 2 rate cuts by the end of this year full priced in with odds of a 3rd on the rise (blue line is the implied hikes/cuts via Fed funds futures for 2020). #SPX is down over 4.8% from peaks seen last week https://t.co/is6Wbl6XIz
  • #Coronavirus update on 2 U.S. companies just crossed the wires: United Airlines (-0.62% afterhours): - Withdraws 2020 forecast with 100% decline in near-term demand to China Mastercard (-2.94% afterhours): - Sees lower revenue growth in the first quarter
  • RT @KyleR_IG: * MASTERCARD SEES LOWER REVENUE GROWTH ON CORONAVIRUS IMPACT Corporate warnings coming in thick and fast today.
  • The iShares #Malaysia ETF closed at its lowest since Aug 2004 and the Malaysian #Ringgit weakened to August 2019 lows in the aftermath of Prime Minister Mahathir Mohamad resigning yesterday, adding further uncertainty amid a deteriorating outlook due to the #Coronavirius $USDMYR https://t.co/uFfxtlMDAo
  • Recession risk is back on the rise and largely attributable to expected economic impact from the #coronavirus outbreak. Get your market update from @RichDvorakFX here:https://t.co/NhzJHEqwj6 https://t.co/nWjrHlR6Ud
QE3 Talks to Accelerate Dollar Declines- Index Approaches Key Support

QE3 Talks to Accelerate Dollar Declines- Index Approaches Key Support

2011-10-24 23:15:00
Michael Boutros, Technical Strategist
Share:
QE3_Talks_to_Accelerate_Dollar_Declines-_Index_Approaches_Key_Support_body_Picture_2.png, QE3 Talks to Accelerate Dollar Declines- Index Approaches Key SupportQE3_Talks_to_Accelerate_Dollar_Declines-_Index_Approaches_Key_Support_body_Picture_3.png, QE3 Talks to Accelerate Dollar Declines- Index Approaches Key Support

The greenback was weaker at the close of trade in North America with the Dow Jones FXCM Dollar Index(Ticker: USDollar) sliding 0.47% on the session. Equity markets continued their advance with the Dow, the S&P, and the NASDAQ climbing 0.89%, 1.29%, and 2.35% respectively. Strong corporate earnings and, in our opinion, unfounded optimism regarding the proposed European rescue package continued to prop up the risk trade with higher yielding, growth backed assets advancing across the board. However with expectations for a “euro-fix” propping up markets for more than a week now, officials will need to ensure the proposed crisis package will be ambitious enough to satisfy nervous investors.

The index broke below the 38.2% Fibonacci extension taken from the June 2010 and November 2010 crests at 9745 on Friday as hopes for substantial progress from the EU leaders over the weekend propped up investor appetite. The dollar’s recent decline gathered pace today as more talks of a possible QE3 weighed with the index which broke below the 100-day moving average at 9633 before finding support at former long-term trendline resistance. The 50% Fibonacci extension at 9563 is now key for the greenback, with a break here risking substantial losses. Note that a sharply sloped daily relative strength suggests further dollar losses after breaking below the 44 support level.

QE3_Talks_to_Accelerate_Dollar_Declines-_Index_Approaches_Key_Support_body_Picture_4.png, QE3 Talks to Accelerate Dollar Declines- Index Approaches Key Support

A closer look at the index shows the dollar breaking below the 61.8% Fibonacci retracement taken from the August 1st advance at 9633 before finding solace just above interim support at 9585. A break here sees subsequent floors at the 76.4% retracement at 9515 and 9450. Topside resistance now holds at former support backed by 9700, the 50% retracement at 9730 and 9760.

QE3_Talks_to_Accelerate_Dollar_Declines-_Index_Approaches_Key_Support_body_Picture_5.png, QE3 Talks to Accelerate Dollar Declines- Index Approaches Key Support

The greenback fell against all four component currencies highlighted by a 0.96% decline against the Australian dollar. The reserve currency continues to come under increasing pressure as talks of possible further quantitative easing measures from the Fed weigh on the greenback’s outlook. Accordingly the dollar has fallen against all its major counterparts with the aussie acting as the chief beneficiary of the recent risk-on environment. The euro saw the smallest gains of the lot, advancing just 0.20% ahead of Wednesday’s EU summit where officials are planning to announce fresh plans to contain the debt crisis which has continued to weigh on global markets. As we noted in today’s Winners/Losers Report, risk to the euro remain heavily weighted to the downside as expectations for a substantial aid package for the region continue to climb.

Tomorrow’s economic docket is highlighted by the October consumer confidence report with consensus estimates calling for a print of 46.0, up from a previous read of 45.4. A strong print has the capacity to further fuel the recent rally as expectations for improved consumer spending take root. Although the single greatest risk to broader market sentiment remains developments out of the Euro zone, further talk of QE could greatly impact the dollar’s performance as the implementation of additional dollar diluting measures could lessen the greenback’s appeal as a haven.

Upcoming Events

Date

GMT

Importance

Release

Expected

Prior

10/25

13:00

LOW

S&P/Case-Shiller Composite-20 s.a. (MoM) (AUG)

0.15%

0.05%

10/25

13:00

LOW

S&P/Case-Shiller Composite-20 (YoY) (AUG)

-3.55%

-4.11%

10/25

13:00

LOW

S&P/Case-Shiller Home Price Index (AUG)

-

142.77

10/25

14:00

HIGH

Consumer Confidence (OCT)

46.0

45.4

10/25

14:00

MEDIUM

House Price Index (MoM) (AUG)

0.2%

0.8%

10/25

14:00

LOW

Richmond Fed Manufacturing Index (OCT)

-1

-6

Written by Michael Boutros, Currency Analyst with DailyFX.com

To contact Michael emailmboutros@dailyfx.comor follow him on Twitter @MBForex.

To be added to Michael’s email distribution list, send an email with subject line “Distribution List” to mboutros@dailyfx.com

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

DISCLOSURES

News & Analysis at your fingertips.