Euro and Sterling both weaken against dollar ahead of ECB and BoE rate decision today. Dollar index is back pressing this week's high of 79.53 and is set to resume recent rally. The ECB will most likely announce to keep the main-refinancing rate at 1% at the meeting Thursday. Although economic recovery remains on track, there have been signs showing that the growth is losing steam. Therefore, there's no urgent need for the central bank to unwind its policies other than the non- standard ones. On the other hand, BoE is also widely expected to leave rates unchanged as well as pause the asset purchase program.
Aussie and Kiwi are sharply lower overnight after worse than expected economic data. Retail sales in Australia unexpectedly dropped -0.7% mom in December versus consensus of 0.3%. Meanwhile, New Zealand unemployment rate surged sharply from 6.5% to 7.3% in Q4. Other data to be released today include Canadian building permits and Ivey PMI, US Q4 non-farm productivity, factory orders and initial jobless claims.
Looking at the dollar index, current development suggests that pull back fro 79.53 has already completed at 78.68 after drawing support from 4 hours 55 EMA. Break of 79.53 will confirm rally resumption and target medium term fibonacci level of 38.2% retracement of 89.62 to 74.19 at 80.08 next. Nevertheless, a break of 78.68 will indicate that a short term top is at leave formed on bearish divergence condition in 4 hours MACD and bring deeper pull back to 78.03 support and below.
Daily Pivots: (S1) 0.8789; (P) 0.8852; (R1) 0.8892;
AUD/USD's break of 0.8779 indicates that recent fall from 0.9327 has resumed and should be targeting 0.8734 support next. As noted before, break there will confirm that whole decline from 0.9404 high has resumed and should target medium term fibonacci level at 23.6% retracement of 0.6008 to 0.9404 at 0.8603. On the upside, though, above 0.8915 will argue that a short term bottom is formed and will flip intraday bias back to the upside for stronger rebound.
In the bigger picture, the failure below 0.9404 high and deep pull back from 0.9327 mixes up the outlook of AUD/USD and we'll stay neutral for the moment. Nevertheless, one thing to note is that AUD/USD is losing upside momentum as seen with bearish divergence in daily MACD. Hence, even in case of another rise, we'd expect strong resistance as AUD/USD approaches 2008 high of 0.9849 and bring reversal. On the downside, break of 0.8734 support will in turn revive the case that whole medium term rise from 0.6008 has completed and will turn outlook bearish for deeper correction towards 0.7702/0.8626 support zone.
Aussie and Kiwi are sharply lower overnight after worse than expected economic data. Retail sales in Australia unexpectedly dropped -0.7% mom in December versus consensus of 0.3%. Meanwhile, New Zealand unemployment rate surged sharply from 6.5% to 7.3% in Q4. Other data to be released today include Canadian building permits and Ivey PMI, US Q4 non-farm productivity, factory orders and initial jobless claims.
Looking at the dollar index, current development suggests that pull back fro 79.53 has already completed at 78.68 after drawing support from 4 hours 55 EMA. Break of 79.53 will confirm rally resumption and target medium term fibonacci level of 38.2% retracement of 89.62 to 74.19 at 80.08 next. Nevertheless, a break of 78.68 will indicate that a short term top is at leave formed on bearish divergence condition in 4 hours MACD and bring deeper pull back to 78.03 support and below.
Daily Pivots: (S1) 0.8789; (P) 0.8852; (R1) 0.8892;
AUD/USD's break of 0.8779 indicates that recent fall from 0.9327 has resumed and should be targeting 0.8734 support next. As noted before, break there will confirm that whole decline from 0.9404 high has resumed and should target medium term fibonacci level at 23.6% retracement of 0.6008 to 0.9404 at 0.8603. On the upside, though, above 0.8915 will argue that a short term bottom is formed and will flip intraday bias back to the upside for stronger rebound.
In the bigger picture, the failure below 0.9404 high and deep pull back from 0.9327 mixes up the outlook of AUD/USD and we'll stay neutral for the moment. Nevertheless, one thing to note is that AUD/USD is losing upside momentum as seen with bearish divergence in daily MACD. Hence, even in case of another rise, we'd expect strong resistance as AUD/USD approaches 2008 high of 0.9849 and bring reversal. On the downside, break of 0.8734 support will in turn revive the case that whole medium term rise from 0.6008 has completed and will turn outlook bearish for deeper correction towards 0.7702/0.8626 support zone.
