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Dollar Index Slides 0.5%, Weakness Extends Through October Lows

FOREX
  • The dollar has been under pressure throughout the latter half of Thursday's session and selling momentum in the dollar index has accelerated following the break of short-term support below the October lows.
  • The DXY (-0.5%) has consolidated near the lows, having reached the first area of support for the index. The selling coincides with sell-side month-end models uniformly pointing to USD sales into the October fix, with some models noting the signal is strongest against the JPY.
  • The main beneficiaries of the greenback weakness were the Euro and the Swiss Franc, both rising around 0.7%. EURUSD price activity picked up following during the ECB press conference where there was only a mild rates pushback, adding a marginal tailwind for the single currency.
  • EURUSD had some clear levels of resistance to rip through, including multiple daily highs between 1.1665-69. The rally was capped at 1.1692, however, the move represents the largest daily range for EURUSD since mid-June of 110 pips. There is a key resistance at 1.1711, the top of a bear channel drawn from the Jun 1 high. Broader trend conditions remain bearish below this channel resistance.
  • Gains in GBP, AUD and NZD were smaller in magnitude, although provide solid extensions of short-term bullish trends throughout October.
  • European Flash GDP readings will precede Eurozone HICP Flash CPI Estimates. The US session will focus on Canadian GDP as well as US Core PCE Price Index. The week's calendar will conclude with the MNI Chicago PMI.
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