Confidence leads FX market
Dollar’s rebound extends further in US session after better than expected Conference Board Consumer Confidence,
which increased to 104.5, beating expectation of 102.3. Prior reading was also revised up from 99.6 to above at 100.2. Looking at the sub-indices, expectations for the next six months rose to 89 from 84.4. Optimism about consumers’ current situation increased to 127.7 from 123.9. The improvement in confidence seems to be internally consistent.
Earlier today, Euro was pressured after German Ifo business confidence. On the surface, the headline index’s fall to 104.9 from 105.0 was mild and better than expected. Current assessment index actually posted an increase to 111.3. However, expectations index fell below 100 for the first time since nov 2005 to 98.9. Higher interest rates and next year’s planned VAT increase are considered hurting business confidence. Euro also received additional pressure on cross selling against Sterling and Yen.
EUR/USD
Daily Pivots: (S1) 1.2712; (P) 1.2764; (R1) 1.2799;
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EUR/USD’s fall from 1.2828 extends further to below mentioned fibo support of 61.8% retracement of 1.2630 to 1.2828 at 1.2706, reaching as low as 1.2668 so far. At this point, intraday bias remains on the downside as long as EUR/USD stays below 1.2705 minor support and further fall towards 1.2630 low cannot be ruled out.
Break of 1.2706 support has turned short term outlook mixed again. But as discussed before, below 1.2630 low will shift favor back to the case EUR/USD is still bounded in a larger scale consolidation that started from 1.2978 which should be followed by retest 1.2457 cluster support (38.2% retracement of 1.1639 to 1.2978 at 1.2467). Meanwhile, it will take a rebound to above 1.2758 resistance to revive short term bullishness.
Read full report (EUR/USD, GBP/USD, USD/CHF, USD/JPY) here.
Shing-Ip Tsui is the founder and CEO of
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