Dollar strengthens in early US session after disappointment from consumer confidence data which triggered some selloff in stocks. DOW reversed earlier gains and dropped back to below 9800 level. Crude oil and gold are soft in tight range and is vulnerable to further decline. Dollar index broke yesterday's high of 77.25 to resume recent rebound. Conference Board Consumer Confidence unexpectedly dropped to 53.1 in September, much worse than expectation of a rise to 57. S&P Case Shiller house price index beat expected and dropped only -13.3% in July, smallest drop in 17 months.


Sterling was lifted by surprise in retail sales report in UK. CBI retail sales balance unexpected rose to +3 in September, matching April's high. CBI said that conditions in the retail sector are beginning to stabilize, with sales broadly flat in the year to September, and expected to remain unchanged in October. ONS revised up Q2 GDP in UK from -0.7% qoq to -0.6% in the final report. YoY rate was left unchanged at -5.5%.

Euro revised little support from confidence indicators in September. Economic confidence rose from 80.8 to 82.7. Consumer confidence rose from -22 to -19. Services confidence rose from -26 to -24. Services confidence rose from -10.7 to -9. German import price rose more than expected to 1.3% mom in August.

Japan CPI dropped -2.2% yoy while core CPI dropped slightly more than expected by -2.4% yoy in August.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.4549; (P) 1.4635; (R1) 1.4706; More

EUR/USD's fall resumes by breaking 1.4564 and at this point, intraday bias remains on the downside. As discussed before, we're still favoring the case that a short term top is at least formed at 1.4842, with bearish divergence condition in 4 hours MACD. Further decline is expected to be seen to 1.4446 resistance turned support next and break will target key support level at 1.4177. On the upside, above 1.4646 minor resistance will turn intraday outlook neutral first. But risk will remain on the downside as long as 1.4842 resistance holds.

In the bigger picture, rise from 1.2456 is the third leg of the medium term consolidation pattern that started at 1.2329 and should be close to completion, with the current rise as the fifth wave in the five wave sequence from 1.2456. Such rise is expected to be limited by 1.4867 key resistance. Break of 1.4177 support will be an important signal that EUR/USD has already topped out and break of 1.3747 support will be the confirmation. In such case, deeper decline should be seen that sends EUR/USD through 1.2329 low eventually.