Talking Points:
- NZD/USD Sits at Former Resistance Ahead of Reserve Bank of New Zealand (RBNZ)
- Bearish USD/JPY Outlook Favored as Pair Fails to Push Back Above Former Support
- USDOLLAR Remains at Risk of Carving Lower-High as Housing Data Disappoints
Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
DJ-FXCM Dollar Index | 10438.94 | 10439.47 | 10427.43 | 0.03 | 45.50% |
NZD/USD:
- Watching former resistance around 0.8670-0.8700 for new support ahead of the Reserve Bank of New Zealand (RBNZ) policy meeting on July 23.
- RBNZ widely expected to deliver another 25bp rate hike; will they continue to normalize beyond July after 2Q CPI fell short of expectations?
- Long-term bias remains bullish as NZD/USD preserves the bullish trend carried over from 2013; Credit Suisse Overnight Index Swaps (OIS) shows expectations for at least 50bp worth of rate hikes over next 12-months.
USD/JPY:
- Downward trending channel continues to take shape as USD/JPY fails to push back above former support around 101.80-102.00; another lower-high?
- Next downside target comes in at 101.20-30 (78.6% Fibonacci retracement); could see a more meaningful run at the 101.00 handle given the string of lower-highs in July.
- As the Bank of Japan (BoJ) remains reluctant to further expanding its asset-purchase program, the shift in the policy outlook may continue to drive the USD/JPY lower as the Fed retains a dovish tone.
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Price & Time: Several Major Exchange Rates At Pivotal Levels
NZDJPY Reversal Underway- Scalps Target Key Support at 88.20
USDOLLAR Daily
Chart - Created Using FXCM Marketscope 2.0
USDOLLAR(Ticker: USDollar):
- Dow Jones-FXCM U.S. Dollar Index giving back the advance to 10,438 as Housing Starts & Building Permits disappoint.
- Lack of momentum to close above 10,440 (78.6% Fibonacci retracement) raises the risk for another lower-high in the USDOLLAR.
- Downside targets remain favorable as the broader descending triangle from earlier this year remains in play; key hurdle comes in at 10,354, the October low.
- Following the Humphrey-Hawkins Testimony, looks like Fed will pay closer attention to housing, wage growth & broader labor market data.
- Interim Resistance: 10,508 (61.8% retracement) to 10,524 (38.2% retracement)
- Interim Support: 10,354 (Oct. low) to 10,375 (50.0& retracement)
Release | GMT | Expected | Actual |
Initial Jobless Claims (JUL 12) | 12:30 | 310K | 302K |
Continuing Claims (JUL 5) | 12:30 | 2580K | 2507K |
Housing Starts (MoM) (JUN) | 12:30 | 1.9% | -9.3% |
Housing Starts (JUN) | 12:30 | 1020K | 893K |
Building Permits (MoM) (JUN) | 12:30 | 3.0% | -4.2% |
Building Permits (JUN) | 12:30 | 1035K | 963K |
Philadelphia Fed. (JUL) | 14:00 | 16.0 | 23.9 |
Fed's James Bullard Speaks on Monetary Policy | 17:35 |
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--- Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
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