Daily Report: Dollar Weakens Sharply, Consolidation Finished?

Dollar edges further higher against most majors today but failed to maintain moment after hitting some near term resistance levels then reversed The intraday turn argues that this week's recovery in the greenback has possibly ended and is turning focus back to recent lows. And break will confirm recent fall in the greenback has resumed. Durable goods order is the main focus in the US session today. After three months of consecutive decline, economists expect the trend to continue and have another month of contraction by -1.5% in Apr. Ex transport orders is also expected to reverse March's gain of 0.9% and fall -0.5% in Apr. Another focus will be the oil and gas inventories which would trigger some movements in oil prices which in turn move the greenback too.

Released earlier today Australia Westpac leading economic index climbed 0.2% in Mar. Aussie was originally pressured by fall in gold prices but was then boosted by broad based weakness in dollar. Germany Import price rose 0.9% mom, 5.7% yoy in Apr, beating expectation of 0.7% mom, 5.5% yoy. Germany CPI will be released later today and is expected to show accelerated inflation by 0.4% mom, 2.8% yoy in May.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.5643; (P) 1.5730; (R1) 1.5778; More

EUR/USD's sharp retreat from 1.5818 touches 4 hours 55 EMA (now at 1.5679) as expected and rebound strongly since then. Intraday outlook remains neutral for the moment. Though, break of 1.5818 will indicate that whole rise from 1.5284 has resumed for retesting 1.6019 record high. On the downside, below 1.5665 will suggest that correction from 1.5818 will have another fall before completion. But still, downside is expected to be contained well above 1.5486 cluster support (61.8% retracement of 1.5284 to 1.5818 at 1.5488) and bring rally resumption.

In the bigger picture, EUR/USD's rise from 1.4309 should have completed at 1.6019. Though, strong rebound from 1.5284 indicates that subsequent price actions from 1.6019 are probably developing into sideway consolidation only. In other words, the current rise from 1.5284 should extend further to retest 1.6019 high and then followed by another fall to retest 1.5284 support before completing the consolidation. Though, premature completion of the rise from 1.5284, confirmed by break of 1.5486 support will indicate that correction from 1.6019 is going to go deeper and probably test 1.4966 cluster support (61.8% retracement of 1.4309 to 1.6019 at 1.4962) instead.

Forex News Digest

• The Day Ahead Canada & U.S.: U.S. Durable Goods, Canadian Bank Earnings
• U.S. Preview: Durable Goods Ex-Transport to Fall by 0.5% in April
• U.S. WashPost/ABC Consumer Comfort Drops to -51
• Important Authorities Stress Strong Dollar in U.S. Interests, Says ECB's Trichet
• Fed's Yellen Says Current Rates "Appropriate" to Stimulate Growth (Update 2)
• Central Banks Can't Afford to Ignore Headline Inflation, Observers Say
• Yen Gains as Investors Reduce Carry Trades on Decline in Asian Stocks
• Australian Dollar to Advance to $1.04 by Year-End on Rates, ANZ Predicts
• Orders for U.S. Durable Goods Probably Fell as Business Spending Faltered
• Euro May Advance to 164.46 Yen on MACD Technical Chart, Forecast's Ng Says
• U.K. Treasury Is Struggling to Find Northern Rock Valuer, Telegraph Says
• U.K. Prime Minister Brown to Meet With Oil Chiefs on Price Rises, BBC Says
• Australian Dollar Rally Ends as Gold Drops; New Zealand Dollar Snaps Gain

More Forex News

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