BarryRoy.com

Remarks by FOMC member Charles Plosser have given a boost to the US dollar. Prices firmed after Plosser stated that monetary policy makers will have to “back up their words with actions” to keep inflation expectations anchored. Stating that the Fed would need to “reverse course” and added that the reversal be started “sooner rather than later”.  The hawkish remarks moved the EUR/USD currency pair to 1.5865, near daily support. Technicians expect the US dollar to remain strong throughout the New York trading.

The EUR/USD currency pair has moved into a very tight range ahead of the onslaught of data to arrive starting Wednesday. Expect both Eurozone and US data to move the markets.  We’ll be watching the US retail sales data on Thursday. The consensus is for a substaintail contraction in month over month figures.

We were able to book a nice profit as the EUR/USD currency pair traced a new record at 1.6036. We are now watching consolidation as the pair unwinds from overbought conditions. Price is curremtly at the daily resistance-turned-support. We’ll look for additional chances to get back in the market. The situation is somewhat clouded by a great deal of rheteroic coming from Washington, and other activity involving the US dollar this morning. Word of the day is caution.

The EUR/USD currency pair is making another stab at the psychological resistance at 1.5900. A break here will open the door to the recent all-time high at 1.6019. Daily support held this morning at 1.5850 so we will be looking to go long.

The currency market is currently taking a deep breath ahead of two days of data that should move the market. Wednesday will see the Eurozone PPI numbers at 9:00 GMT. Analysts expect a slight increase which should add to inflation fears and confirm an expected rate increase in the Euro on Thursday at 11:45 GMT. Wednesday also brings the US ADP employment numbers. While this number is not well regarded by many, it can still skew the markets. And in the holiday-shortened week in the US, we have the US initial claims, as usual, and the non farm payroll data will be released Thursday at 12:30 GMT rather than the usual Friday release. Look for any weakness in the US data to further the next spike in the Euro.