USD Keeps Sliding on Dovish Powell, EZ CPIs Enter the Limelight

POWELL’S REMARKS KEEP WEIGHING ON USD, EZ INFLATION UNDER THE RADAR

The US dollar continued to slide against all the other major currencies on Thursday and during the Asian morning Friday. It fell the most versus NZD, CAD, and CHF in that order.

NIKKEI 225 — TECHNICAL OUTLOOK

Th Nikkei 225 cash index tumbled overnight after it hit resistance at 27940. Overall, the index remains below the downside resistance line drawn from the high of June 15th, and thus, we would consider the short-term outlook to be negative.

EUR/USD — TECHNICAL OUTLOOK

EUR/USD has been in a recovery mode since Wednesday, when Fed Chief Powell disappointed those expecting hints with regards to QE tapering. Despite the prior trend being to the downside, we believe that the break above the key resistance (now turned into support) barrier of 1.1825 may have turned the short-term outlook to a positive one.

AS FOR THE REST OF TODAY’S EVENTS

Later in the day, we get the US personal income and spending data for June, alongside the core PCE index for the month. Personal income is expected to have declined again, but at a slower pace than the previous month, while spending is forecast to have slowed somewhat. The final UoM consumer sentiment index for July is also due to be released and it is just expected to confirm its preliminary estimate of 80.8. From Canada, we have the monthly GDP for May, with expectations pointing to a 0.3% mom contraction, the same as in April.

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