Carney was less hawkish than expected which saw cable longs unwind slightly although the downward reaction was rather muted considering. We also had a poor ZEW and much better than expected US Consumer Confidence and Home Sales data which added to the downside for the European pairs. A failure to break to the recent upside saw Aussie longs unwind somewhat too in sympathy.
Wednesday sees US Durable goods and final GDP as data points to focus on so we may push lower for the European pairs once again if data impresses to add to the minor momentum lower however several of the index charts look ripe for a break of trend, particularly the Euro so the struggle to hold onto gains from the dollar could translate into some downside. If data is poor this will align with the market’s bearish USD bias over the past week or two and see the European pairs rally for a break of trend.
If you have any questions or comments then feel free to tweet me @LFXMark
Yet again we’ve gone totally nowhere for the dollar. We’ve pushed higher and lower than the range of yesterday but really we are directionless until the next data point. As such the resistance showing EURUSD 1.3575 remains untested and the support at EURUSD 1.3624 remains untested. These levels should decide the flow with a clean break of either the trigger. I neutral USD although prefer downside in the short term
**USD% Index Resistance (EURUSD support): EURUSD 1.3600, 1.3575**
**USD% Index Support (EURUSD support): EURUSD 1.3609, 1.3624**
Poor ZEW survey, good US data and still no downside for the EUR% index is making this recent rally from triple bottom (highlighted in blue) seem a little more compelling. We are still contained by the bearish channel although we have now tested it numerous times in a short period of time so we could realistically see a break there soon. As always in summer trading, volatility is terrible and price action sluggish so bulls should wait for the break of trend as confirmation. The cluster of resistance between 1.3622 and 1.3635 needs to be defeated confidently first. I am bearish but suspicious of a bullish break of bearish trend soon
**EUR% Index Resistance: EURUSD 1.3622, 1.3632, 1.3700**
**EUR% Index Support: EURUSD 1.3598, 1.3589**
Yawn. Still nothing from the Yen. It looked like we may get something exciting after a strong USDJPY push higher weakened the Yen, but this was reversed almost completely and we remain in the middle of a narrow range unable to even make it to the sides for range-bound trading. RSI is no help at all in these conditions so until we make it to either extreme of the range highlighted as the green support and red resistance then we could go either way. Fundamentally we prefer upside from the Yen although it will take more data to allow that. I am slightly bullish JPY% until we reach the edges of the range
**JPY% Index Resistance (USDJPY Support): USDJPY 101.50, 101.25**
**JPY% Index Support (USDJPY Resistance): USDJPY 102.84, 103.75**
Carney’s lack of hawkishness pushed us down to the minor but steep bullish channel shown in pink, this is not a strong support but it may be enough to hold for the time being considering EURGBP is also at strong resistance and could sell off once again. This requires either poor US data or for the market to ignore good data. The second scenario is preferable and would open the door for a push higher to the 1.7100 level for cable which signifies the completion of this run higher within the bullish channel. There has been much talked about the 1.7000 level although it now seems the 1.7100 level is the next key milestone to break and seems more likely to offer the resistance that 1.7000 failed to give. I remain bullish GBP
**GBP% Index Resistance: GBPUSD 1.7000, 1.7061, 1.7100**
**GBP% Index Support: GBPUSD 1.6926, 1.6900**
The failure to push higher in this last run up has seen traders rush to lock in profit from long positions which has accelerated the index lower back towards support. Price action is messy though so from these levels we should wait for a confirmed break of the support at 0.9350 before we become too bearish AUD. 0.9300 is now looking likely as a target though in the short term. From there who knows but we would have posted a bearish looking chart in that event which may open the door for 0.9200. Amazingly, gold is holding onto it’s recent gains although the upside is looking slow for a continuation higher. The gold chart does still look like a reversal higher though. I am bearish AUD
**AUD% Index Resistance: AUDUSD 0.9411, 0.9444**
**AUD% Index Support: AUDUSD 0.9355, 0.9324, 0.9300**
Slow messy upside and still contained within the nearside support and resistances, The Franc is finding bids on lows a shown also by the drop in EURCHF. While a modest drop for the cross, it is a reliable drop with continuous downside now for several days suggesting a reluctance to sell the Franc by traders and another push towards our suspicion of dollar downside.
I am neutral/bullish CHF
**CHF% Index Resistance (USDCHF support): USDCHF 0.8916, 0.8800**
**CHF% Index Support (USDCHF resistance): USDCHF 0.9000, 0.9024, 0.9056**
Note – the large spike on Mon 16th is a GBPCHF pricing error at the broker
**LittlefishFX Relative Currency Index Strength**
All of the currency indexes used for this analysis are available as a NinjaTrader indicator from the link below. They are eight indexes, USD, EUR, JPY, GBP, AUD, CHF, CAD and NZD with each index made up of the remaining seven pairs, weighted in accordance with the distribution of global FX volume as measured by the Bank of International Settlements in their Triennial Survey.
Get RCIS Indicator here