Markets are pretty quiet as the week starts with most major pairs staying in range. Dollar is a touch softer versus euro and dips to new low of 1.5061 but recovers as the day goes. Sterling, on the other hand, extends last week's sharp fall and weakens broadly against major currencies. Crude oil dips below 80 level on profit taking and gold continues to consolidate around 1050 level. The economic calendar is light today and markets may continue to gyrate in familiar range until major event risks kick in later this week.
Euro is lifted mildly after Financial news, an official newspaper of the Chinese central bank, said that China should increase holdings of Euro and Yen in its reserves holdings to reflect the growing trade with EU and Japan. The article said that the government is working to maintain an appropriate size of reserves to lessen inflationary pressure and yuan appreciation and urged the country to improve yuan's exchange-rate mechanism.
Dollar index's recovery was limited by 4 hours 55 EMA and weakens mildly again. With 75.76 minor resistance intact, there is no sign of bottoming yet and another fall could still be seen. But still, we're expecting further loss of momentum on next fall and downside would likely be contained by lower trend line (now at 74.80) and bring rebound. A break of 75.76 will indicate that a short term bottom is at least formed and will bring rally to upper trendline resistance at 76.49 first. However, a strong break of the lower trend line will indicate that recent fall is regaining momentum for 74.31 support next.
EUR/USD Daily Outlook
Daily Pivots: (S1) 1.4975; (P) 1.5018; (R1) 1.5049; More
Outlook in EUR/USD remains unchanged. While upside momentum is diminishing, there is no confirmation of topping yet. Further rally could still be seen towards 100% projection of 1.4177 to 1.4842 from 1.4483 at 1.5148. But upside would likely be limited there and bring pull back. Below 1.4884 minor support will indicate that a short term top should at least be formed, with bearish divergence conditions in 4 hours MACD and RSI, and bring fall to 1.4483 support in this case.
In the bigger picture, at this moment, there is no sign of topping in EUR/USD yet and current rise might still extend further towards 1.6039 high. However, the whole set of price actions from 1.2329 look is viewed as part of wide range consolidation that started at 1.6039. Hence, upside of the current rise should be limited below this 1.6039 key resistance and bring at least one more medium term fall to complete the consolidation pattern. Break of 1.4483 support will be the first sign that rise fro 1.2456 has completed. Further break of 1.3747 support will confirm and turn outlook bearish for 1.2329/2456 support zone.
Economic Indicators Update
|0:30||AUD||PPI Q/Q Q3||0.10%||0.30%||-0.80%|
|0:30||AUD||PPI Y/Y Q3||0.20%||0.50%||2.10%|
|7:00||EUR||German GfK Consumer Sentiment Nov||4.0||4.5||4.3|
|13:10||CAD||BOC Gov Carney Speaks||--||-0.9|