News & Analysis at your fingertips.

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.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
GBP/USD
Mixed
USD/JPY
Bearish
More View more
Real Time News
  • The US dollar is unloved, oversold and at lows last seen over 30-months ago. At the moment there seems to be very little reason to buy the greenback. Get your $USD market update from @nickcawley1 here:https://t.co/VY3SLs35cp https://t.co/w5ljByv9cf
  • Trading Forex is not a shortcut to instant wealth, excessive leverage can magnify losses, and sentiment is a powerful indicator. Learn about these principles in depth here: https://t.co/lZFM8youtX https://t.co/CpqePQYF4E
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/Yl9vM7kO6a https://t.co/Rg2YGZCUCr
  • The non-farm payroll (NFP) figure is a key economic indicator for the United States economy. It is also referred to as the monthly market mover. Find out why it has been given this nickname here: https://t.co/yOUVEEqhc5 https://t.co/ftrbRkFiJF
  • Human error in the forex market is common and often leads to familiar trading mistakes. These trading mistakes crop up particularly with novice traders on a regular basis. Learn about the top ten trading mistakes and how you can avoid them here: https://t.co/i8E2AXtzF3 https://t.co/Hny2HMYo4I
  • (Weekly Fundamental) Australian Dollar Outlook: Tied to Biden Stimulus Bets, S&P 500, US Dollar, Treasuries $AUDUSD #SP500 #stimulusbill #USD https://www.dailyfx.com/forex/fundamental/forecast/weekly/aud/2021/01/16/Australian-Dollar-Outlook-Tied-to-Biden-Stimulus-Bets-SP-500-US-Dollar-Treasuries.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/H7aus0Aljt
  • The inside bar pattern occurs regularly within financial markets. Incorporating the inside bar strategy can enhance a trader's market analysis. Find out how more here: https://t.co/E3EWOYTYNw https://t.co/7zI3p6UNVs
  • Bank of Japan to mull widening of its long-term yield band -BBG $USDJPY
  • While the rise in longer-dated Treasury yields have been impressive as of late, March highs remain a key focus for resistance The medium-term uptrend remains intact, maintained by rising support from August Fading fiscal stimulus expectations (size) may sour yields ahead https://t.co/L3vBcF0ts7
  • Trading bias allows traders to make informative decisions when dealing in the market. This relates to both novice and experienced traders alike. Start learning how you may be able to make more informed decisions here: https://t.co/rz7fqhRoMG https://t.co/vFJ8zmphMm
US Dollar Plummets on Fed's KO: Open-ended MBS Purchases

US Dollar Plummets on Fed's KO: Open-ended MBS Purchases

2012-09-14 11:03:00
Christopher Vecchio, CFA, Senior Strategist

Let’s be clear: yesterday was a historic day for the Federal Reserve. In an unprecedented move, never before seen, the Fed announced an open-ended quantitative easing program, in which $40 billion of agency mortgage backed securities (MBS) will be purchased each month until the labor market recovers. But given the underlying trends in the labor market – structural weakness in manufacturing due to declining competitiveness (thanks, globalization!) as well as the lowest participation rate in the labor force in over three-decades – it’s clear that the conditions that the Fed would need to rescind its end-all be-all QE program are not going to be coming anytime soon: a “stronger economy that can cause the improvement to be sustained.”

It is of little surprise, then, that the US Dollar is taking such a beating today, falling across the board dramatically save against the Japanese Yen (we believe rising US Treasury yields and a jump in the 2s10s spread can be pointed to as a catalyst). The EURUSD has moved up to 1.3100 while the AUDUSD is back at 1.0600. Whereas it took over three-months for the EURUSD to decline from 1.3000 to 1.2042, it only took six-weeks for it to retrace all of those losses.

From a purely statistical technical perspective, the EURUSD advance has brought it into the rarefied atmosphere: the daily RSI, north of 80.00 at the time of writing (will change given that RSI is calculated on closing prices), it at its highest level since October 14, 2010. Within two-weeks, the EURUSD had topped, and over the next two-months, the pair declined by over 1200-pips. For now, 1.3120/45 looks to be a very interesting zone to the upside.

Taking a look at credit, peripheral European bond yields are back down as core credit erodes, adding to the Euro’s strong technical bias. The Italian 2-year note yield has decreased to 2.190% (-2.6-bps) while the Spanish 2-year note yield has increased to 2.802% (+0.8-bps). Additionally, the German 2-year note yield has increased to 0.088% (+3.3-bps), its highest level since early-July. On the longer-end, the Italian 10-year note yield has decreased to 4.953% (-3.3-bps) while the Spanish 10-year note yield has increased to 5.578% (+0.8-bps); lower yields imply higher prices.

RELATIVE PERFORMANCE (versus USD): 10:30 GMT

EUR: +0.75%

CHF:+0.56%

GBP:+0.51%

AUD:+0.45%

NZD:+0.43%

CAD:+0.35%

JPY: -0.70%

Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): -0.30% (-1.58% past 5-days)

ECONOMIC CALENDAR

US_Dollar_Plummets_on_Feds_KO_Open-ended_MBS_Purchases_body_x0000_i1029.png, US Dollar Plummets on Fed's KO: Open-ended MBS Purchases

The week finishes with some significant data prints out of the United States (but we question the clout of fundamental data now that the Fed has enacted QE-Infinity). At 08:30 EDT / 12:30 GMT, the USD Advance Retail Sales (AUG) report will be released, and is expected to show a modest increase in consumption. A beat here will help the US Dollar rebound today. Also released at the same time is the USD Consumer Price Index (AUG) reading, which is forecasted to show an uptick in inflation following surging food and energy costs over the past several months. At 09:15 EDT / 13:15 EDT, the USD Industrial Production and Manufacturing Production (AUG) reports will be released, though only a very slight uptick in activity is expected. Finally, to round out the day, at 09:55 EDT / 13:55 GMT, the USD U. of Michigan Consumer Confidence (SEP P) survey will be released, and a slight downturn in confidence is anticipated.

TECHNICAL OUTLOOK

US_Dollar_Plummets_on_Feds_KO_Open-ended_MBS_Purchases_body_Picture_5.png, US Dollar Plummets on Fed's KO: Open-ended MBS Purchases

BB represents Bollinger Bands ®

EURUSD: The EURUSD continues to impress, breaking through its 61.8% Fibonacci retracement on the February high to July low yesterday, now testing 1.3100 (!) and the 76.4% Fibonacci retracement at 1.3145. Near-term resistance lies, there and at 1.3240, 1.3265/85, and 1.3360. It is possible that a long-term bottom is now in at the 1.2040/45 low set in late-July. Interim support comes in at 1.2995/1.3005 (mid-April swing low), 1.2930/35, and 1.2820/30 (200-DMA, late-April swing high).

US_Dollar_Plummets_on_Feds_KO_Open-ended_MBS_Purchases_body_Picture_2.png, US Dollar Plummets on Fed's KO: Open-ended MBS Purchases

USDJPY: The USDJPY has rebounded today in line with a rising US 10-year Treasury Note (widening 2s10s spread). The June 1 swing low at 77.65/70 was broken yesterday leading to a washout in new lows below 77.30, something repeatedly noted over the past week as a potential occurrence. A close below 77.90 leaves open the possibility for 77.65/70 and 77.30. A close back above 77.90 exposes 78.10/20, 78.60, and 79.10/30 (100-DMA, 200-DMA, descending trendline off of the April 20 and June 25 highs).

US_Dollar_Plummets_on_Feds_KO_Open-ended_MBS_Purchases_body_Picture_3.png, US Dollar Plummets on Fed's KO: Open-ended MBS Purchases

GBPUSD: The key 1.6120/40 level cracked with ease today and we’ve thus shifted our bias somewhat. A weekly close above said level opens the door for a move towards 1.6400 in the coming days. The former April swing highs at 1.6260 (by close), 1.6300 (by high) are in focus for now; this would also represent a break of the descending trendline off of the April 2011 and August 2011 highs. Below 1.5930/40, near-term support comes in at 1.5860/75 (ascending trendline off of August 2 and August 31 lows), 1.5770/85 (late-August swing lows), and 1.5700.

US_Dollar_Plummets_on_Feds_KO_Open-ended_MBS_Purchases_body_Picture_1.png, US Dollar Plummets on Fed's KO: Open-ended MBS Purchases

AUDUSD: The AUDUSD is threatening a breakout today, with the descending trendline off of the February 2012 and August 2012 highs coming in at 1.0560 today. Near-term resistance comes in at 1.0600/15 (August high) and 1.0630. Should we see a rally up towards 1.0600 again, another failure would market a Double Top and signal a push for a test of 1.0265 (ascending trendline off of the June 1 and September 6 lows) then 1.0200/05 (100-DMA).

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, send an e-mail with subject line "Distribution List" to cvecchio@dailyfx.com

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

DISCLOSURES