The dollar was reasonably well bid ahead of the release of the soft US PPI data, with the Euro falling to 1.1705 in Europe, but that all turned around and the pair are finishing the day at close to session highs with traders now eyeing the chance of another soft CPI outcome later today which would take the Euro back above 1.1800 and possibly to test the trend high above 1.1900.
The short term momentum indicators look slightly constructive, and a soft CPI reading would see a run back to 1.1800 and then to the 8 Aug high of 1.1823. If we do head higher further points of resistance would be seen at minor Fibo levels, ahead of the 4 Aug high of 1.1882 and the trend high at 1.1909. Back above 1.0910, there is very little resistance to stand in the way of a move towards 1.2000, with the next Fibo level not actually seen until 1.2165 (50% of 1.3993/1.0340) although this seems the less likely direction in the next day or two.
On the downside, the initial support arrives in the broad band between 1.1705/1.1685, below which would allow a move towards the 27 July low of 1.1650. Under there would see a test of 1.1600/10, which should be strong support, although I doubt we get there today.
Preferred Strategy: Neutral. Wait for the CPI. The short term momentum indicators do suggest that we are going to see the dollar remain under pressure, and I would not be putting too much hope on a strong CPI figure to support it.
|24 Hour: Neutral||Medium Term: Mildly Bearish|
|1.1857||(76.4% of 1.1909/1. 1688)||1.1703||Session low|
|1.1825||(61.8% of 1.1909/1. 1688)||1.1688/85||8 Aug low/ Rising trend support|
|1.1800||(50% of 1.1909/1. 1688)||1.1650||27 July low|
|1.1784||Session high||1.1612||26 July low|
|1.1772||200 WMA /(38.2% of 1.1909/1. 1688)||1.1600||(38.2% of 1.1118/1.1909)|
Economic data highlights will include:
German CPI/HICP, US CPI, Baker Hughes Oil Rig Count
Interested in EURUSD technicals? Check out the key levels
- R3 1.1886
- R2 1.1836
- R1 1.1804
- PP 1.1754
- S1 1.1722
- S2 1.1672
- S3 1.1640
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