• EUR/USD -0.8%
• EUR/CAD -0.9%
• USD/CHF +1.0%

EUR/USD

Dollar Bulls Run Despite Thin U.S. Growth: Market participants were shocked to find that growth had slowed considerably in the world's largest economy despite relatively optimistic releases preceding the gross domestic product report.  Compared to higher and earlier estimates of 4.1 percent, the current growth read fell precipitously to 1.1 percent.  Signaling a potential slowdown, bulls were reinvigorated by a better than expected housing report and inflation measure which exacerbated already nascent profit taking.  With the long ride lower against the majors for the week, traders squared positions ahead of the week.  Next week will provide price action with further volatility as personal spending and income figures are set for release in addition to key confidence and manufacturing figures. Ticking higher in the previous readings, current expectations are for additional climbs setting for a potential dollar rebound next week.

Technically Speaking: Euro bulls were technically weak following the release of the morning's fundamental report rising to meet formidable resistance at 1.2219 (38.2% fib from the 1.2052-1.2323 advance).  The 50-hour moving average offered considerable capping above at 1.2230 leading to a textbook evening star formation.  Now consolidating at the close at 1.2098, upside potential exists with the Stochastic showing oversold conditions.  However, bias is showing a retest of the 1.2052 hourly low on January 19th before upside momentum builds.  Should bulls make a run, barriers in the near term loom at 1.2140 (10-hour moving average) and 1.2171 (20-hour moving average) before a definitive test of previous consolidation at 1.2219.

Rumorville: Heavy bidding considerations reside slightly below spot at 1.2065 with support clusters around 1.2004/07, the daily lows of January 4th and 12th.  To the upside, offers begin at 1.2130 with stronger selling pressure from resistance at 1.2165.

EUR/CAD

Bears Look To Stay In EUR/CAD: Consolidating ahead of the New York cut, the EURCAD cross has broken the broadening pattern that has formed over the past month after violating previous support at 1.3927.  Finding a bottom at the 1.3871 figure, further downside looks to be in the cards for the synthetic should the near term floor at 1.3870 (hourly spike low and longer term bottomside trendline) prove weak.  Subsequent downside momentum would be capped in the near term at 1.3825 (78.6% fib from the 1.3707-1.4250 advance) confirmed by the near oversold reading in MACD.  Short term advances would see an attempt at 1.3944 (10-hour moving average) and 1.3985 (20-hour moving average) with capping at the 50% fib price of 1.4061.

Rumorville: The January 5th daily low looks to serve as a first level for bidders at 1.3860 with heavier considerations at 1.3815.  Above spot, offers are seen at 1.3966 with stronger sellers looming at 1.4020.

USD/CHF

Swissie Looks Ripe For Retracement: Oversold signals loom over the current spot rate with Stochastic reading a 90.55 following the runup sparked by a textbook morning star formation.  Nearing the intermediate term resistance ceiling, downside potential exists for the USDCHF after a potential retest of the 1.2805 hourly spike high hit on January 20th.  With more probable downside, bears will notice downside barriers at 1.2785 (10-hour moving average) and 1.2746 (20-hour moving average) before attempting the previous formidable floor at 1.2695 (confluence of the hourly support and 50-hour moving average).

Rumorville: Initial bidding looks to come in at just below spot, prompting a further move higher past current consolidation at 1.2820.  Heavier considerations reside at 1.2750.  Comparatively, offers  reside at 1.2892, daily highs hit on multiple days.

Richard Lee is a Currency Strategist at FXCM.