After consolidating for most for the day, dollar resumes yesterday's rebound after release of much worse than expected consumer confidence data from US. Conference Board Consumer Confidence unexpectedly dropped for the second month to 47.7 in October versus consensus of a rise to 53.7. Stocks opened mildly higher in early US session but turned red immediately after the data. Dollar rides on risk aversion, as we as further pull back in crude oil and gold and strengthens broadly.
Other data released today saw S&P Case-Shiller house price index for 20 US cities rose for the third consecutive month in August by 1%. Annual rate improved more than expected to -11.3%. Eurozone M3 money supply growth slowed more than expected to 1.8% yoy in September. UK CBI distributive trade rose to 8% in September, best reading since December 2007. Swiss UBS consumer indicator rose from revised 6.2 to 6.32 in September.
As noted before, dollar index should have at least formed a short term bottom at 74.94 and main focus is now on 77.47 resistance. A break there will add much credence to the case that whole medium term fall from 89.62 has completed with five waves down to 74.94 already, on bullish convergence conditions in daily MACD. We'll be looking at the prospect of stronger rebound to 38.2% retracement of 89.62 to 74.94 at 80.54 in the least bullish scenario.
EUR/USD Mid-Day Outlook
Daily Pivots: (S1) 1.4792; (P) 1.4928; (R1) 1.5010; More
EUR/USD's fall from 1.5061 resumes in early US session and reaches as low as 1.4787 so far. As noted before, a short term top is at least formed at 1.5061 on bearish divergence conditions in 4 hours MACD and RSI. Intraday bias remains on the downside and further decline should be seen to 1.4483 support first. On the upside, above 1.4926 minor resistance will turn intraday outlook neutral and bring consolidation. But risk will now remain on the downside as long as 1.5061 resistance holds.
In the bigger picture, the case of topping in EUR/USD is starting to build up with focus now on 1.4483 support. Break there will indicate that whole rise from 1.2456 has finished with bearish divergence conditions in daily MACD. Further break of 38.2% retracement of 1.2456 to 1.5061 at 1.4066 will confirm this case and bring deeper decline to 61.8% retracement at 1.3451 and below.
On the upside, above 1.5061 will suggest that rise from 1.2456 is still in progress and further rally might be seen 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.