Dollar decline losing steam
Dollar dropped further today against Euro, Yen and Swissy
but downside momentum is seen diminishing. Euro’s rally was limited by unexpected downward revision of inflation data which sees core HICP changed to -0.2% to -0.3%, headline HICP also changed from 0% to -0.1% in Jul. On the other hand, Sterling was pressured by surprisingly weak Jul retail sales which dropped 0.3% mom vs expectation of 0.2% rise. Yoy growth also missed expectation and came at 4.0%. With divergence condition apparent, downside of dollar could be limited today and market may turn into consolidation first.
Economic data from US seen jobless claim dropped from upwardly revised 322k to 312k. Jul Leading indicators dropped 0.1% versus expectation of 0.1% rise. Philly Fed index to be released next.
USD/CHF
Daily Pivots: (S1) 1.2243; (P) 1.2310; (R1) 1.2364; More.
Even though edging lower to 1.2236 earlier today, USD/CHF’s downside momentum is seen diminishing as indicated by mild bullish convergence condition in hourly MACD and RSI. A short term low could be around the corner. Above 1.2303 will suggest the fall from 1.2444 has made a short term low already and risk recovery towards 4 hours 55 EMA (now at 1.2326). But as long as upside is limited below 1.2379 resistance, recovery should still be brief and further decline should still resume sooner rather than later towards 1.2182 cluster support.
On the downside, below 1.2236 again will indicate fall from 1.2444 has resumed for 1.2182 clusters support (61.8% retracement of 1.1919 to 1.2594 at 1.2177). However, a firm break below 1.2182 cluster support is needed to indicate fall from 1.2594 has resumed for 1.1919 low. Otherwise, range trading between 1.2182 and 1.2594 is still in progress and risk of another rise remains.
In a bigger picture, USD/CHF’s fall from 1.2594 was still contained by mentioned cluster support of 1.2182 (61.8% retracement of 1.1919 to 1.2594 at 1.2177) As discussed before, subsequent strong rebound that pushed USD/CHF above 1.2365 resistance has shifted favors back to the case that whole medium term decline from 1.3283 has indeed completed at 1.1919 already and subsequent rebound from 1.1919 is merely part of a large consolidation to the whole fall from 1.3283. Such consolidation could extend at least a few more weeks before completion.
Read full report (EUR/USD, GBP/USD, USD/CHF, USD/JPY) here.
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