Dollar Rises Further, Riding on PCE, Chicago PMI and Michigan Survey

Dollar’s rally extends further in US session, heading towards last week’s high against most majors. Core PCE increased 2.5% yoy in Aug, accelerated from prior 2.3% and above expectation of 2.4%. Being Fed’s preferred inflation measure, the Core PCE’s growth is still staying above Fed’s comfort level of 1-2%. It’s making traders believe there isn’t a case for the Fed to cut rates yet. Personal income increased 0.3% while spending increased 0.1% only, below consensus of 0.2%.

Chicago PMI rose from 57.1 to 62.1 in Sep while University of Michigan Confidence survey rose from 82 to 85.4, both beats expectation.

Earlier today, some volatility was triggered by rumors on yuan as a Chinese SAFE official was quoted saying China would issue an unspecified new regulation today but it was quickly denied.


Daily Pivots: (S1) 1.2675; (P) 1.2703; (R1) 1.2729;


EUR/USD’s fall resumes by break below 1.2662 support, reaching as low as 1.2639 so far. At this point, intraday bias remains on the downside as long as EUR/USD stays below 1.2678 minor resistance and further decline is expected towards 1.2630 cluster support (61.8% projection of 1.2829 to 1.2662 from 1.2733 at 1.2630 too). Above 1.2678 will indicate an intraday low is formed and turn outlook consolidative.

As discussed before, break of 1.2630 cluster support 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). On the upside, it will take a firm break above 1.2733 resistance to indicate the fall from 1.2829 has completed first before re-considering short term bullishness.

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Shing-Ip Tsui is the founder and CEO of ActionForex is set up with the aim to empower individual forex traders by providing insightful contents. Analysis reports, live pivot points on majors and crosses, etc are provided with collection of carefully selected educational articles and free trading ebook downloads.