Fundamental Currency Analysis
USD: The U.S. Dollar Index is currently down -0.2180 or -0.25% to 85.3140 after opening the day at 85.2940 in Asia. The Greenback is mixed against the major currencies after a bank holiday yesterday. No significant U.S. economic numbers are expected today, with traders looking to tomorrow’s release of the Fed’s Beige Book, Retail Sales (-0.1%) and PPI data (+0.1%).
EUR: The Euro is off a fraction against the U.S. Dollar today after rising sharply yesterday after the Eurogroup Meetings were held where Greece indicated it would probably not need the remaining loans offered by the IMF. Today’s Eurozone numbers include German ZEW Economic Sentiment (+0.2), Eurozone Industrial Production (-1.5%), Eurozone ZEW Economic Sentiment (+7.1). Also, ECOFIN Meetings are taking place today.
GBP: Sterling is trading steady against the U.S. Dollar today after rising fractionally yesterday with no significant numbers out of the UK. UK releases out later today include CPI (+1.4%), RPI (+2.3%) and PPI Input (-0.4%).
JPY: The Japanese Yen is trading lower against the Greenback today after Japanese PPI increased by +3.5% y/y, which was in line with expectations. Also, the M2 Money Stock increased +3.0% y/y, just slightly higher than the +2.9% expected.
CHF: The Swiss Franc is lower against the U.S. Dollar today after strengthening sharply yesterday. Swiss data later today will have PPI (+0.3%).
AUD: The Aussie extended its gains against the Greenback today, once more fueled by news out of China. The PBOC cut the interest rate paid to lenders on repurchase agreements, which could signal the bank is ready to ease its monetary policy. Also, RBA Assistant Governor Debelle said today that he believes the Australian dollar is trading higher than its economic fundamentals warrant. Australian economic data today had the NAB Business Confidence Index print at 5 compared to a previous reading of 7 that was downwardly revised from 8.
CAD: The Canadian Dollar is trading lower against the Greenback today in the absence of any significant data out of either country.
NZD: The Kiwi is fractionally higher against the U.S. Dollar today in the absence of any significant economic data out of New Zealand.
Highlighted Chart of the Day: USD/CHF
A daily candlestick chart of the USD/CHF currency pair appears above showing the rate approaching the lower support line of its near term up channel drawn in orange and potentially forming a double bottom, as it also trades within a medium term up channel drawn in red. In addition, the rate is trading above its rising 200 day Moving Average shown in green, and its 14 day RSI drawn in blue in the indicator box is falling gently within central neutral territory. (See additional technical analysis in the section below.)
Technical Analysis for the Majors
EUR/USD: The Euro rose to 1.2767 yesterday but fell slightly this morning, as it corrects higher from its recent 1.2500 low. Support is seen at 1.2681/98 and 1.2663, with resistance observed at 1.2759/67 and 1.2791. Its falling 200 day MA now lies at 1.3481, and its 14 day RSI is now in central neutral territory at the 47.57 level. Its outlook is mildly bullish near term but bearish medium term.
USD/JPY: USD/JPY fell to 106.75 yesterday, but rose slightly this morning, as its three wave a-b-c correction off of its recent 110.08 high unfolds lower within a descending wedge pattern now approaching its apex. Resistance appears at 107.52/81 and 107.75/81, with support noted at 107.05 and 106.75/80. The rate’s 14 day RSI remains in central neutral territory at the 41.64 level, and the rate is trading above its rising 200 day MA currently at 103.26. Its outlook is mildly bearish near term and bullish medium term.
GBP/USD: Cable rose to 1.6125 yesterday but then ended up only slightly higher on the day. The rate also rose a bit this morning, as it continues to consolidate above its recent 1.5951 low and below 1.6226. The rate is still trading above its 50.0% Fibonacci retracement level of its long term rally from 1.4812 to 1.7190 at 1.6001, and below its 38.2% Fibo level that provides theoretical resistance at 1.6282. Falling trendline resistance also appears at 1.6275. Furthermore, the rate’s 200 day MA lies at 1.6701 with a falling slope, and its 14 day RSI has fallen into lower neutral territory at the 39.53 level. Its outlook is neutral near term and bearish medium term.
USD/CHF: The Swissy fell to a new recent low at 0.9467 yesterday, but rose slightly this morning, as the rate consolidates below its recent 0.9683 high. It may also have formed a double bottom in the 0.9467/68 region with a neckline at 0.9592. Support is now seen at 0.9497 and 0.9467/68, with resistance noted at 0.9554/67 and 0.9595/0.9618. The rate’s 14 day RSI now reads in central neutral territory at the 57.74 level, and the rate is trading above its rising 200 day MA now situated at the 0.9016 level. Its outlook is neutral near term and bullish medium term. (See highlighted chart above.)
AUD/USD: The Aussie rose to 0.8811 this morning, after also rising yesterday, as it consolidates above its recent 0.8641 low and below 0.8897. The rate remains above its recently broken medium term down trend line now drawn at 0.8390 that provides theoretical support. Resistance is seen at 0.8811/33 and 0.8897, with support at 0.8747 and 0.8683. The rate remains below its mildly falling 200 day MA now at 0.9219, and its 14 day RSI now reads in lower neutral territory at the 44.81 level. Its outlook is neutral near term and bearish medium term.
USD/CAD: USD/CAD rose this morning after falling a bit yesterday, as the rate consolidates below its recent 1.1296 high and above 1.1081. The rate remains between a rising resistance trendline now at 1.1319 and a rising support line drawn at the 1.0963 level, with a longer term support line currently situated at 1.0756. Its 14 day RSI now reads in upper neutral territory at the 60.15 level, and the rate is still trading above its mildly rising 200 day MA now at 1.0944. Its outlook is neutral near term and bullish medium term.
NZD/USD: The Kiwi rose to 0.7915 this morning, after rising notably yesterday, as it consolidates above its recent similar lows of 0.7706 and 0.7712 and below the 0.7972 level. The rate rose to exceed the falling lower line of its medium term descending wedge pattern now drawn at 0.7880, with its upper line currently situated at 0.8027. Resistance is noted at 0.7886 and 0.7915/27, with support seen at 0.7781/93 and 0.7706/12. Also, its 14 day RSI now reads in central neutral territory at the 44.52 level, and the rate remains well below its falling 200 day MA now at 0.8471. Its outlook is mildly bullish near term and bearish medium term.