Daily Report: EUR/USD Rebounds, Correction Completed?
Markets focus turns back to strength in Euro and weakness in dollar as traders are finally back from vacations. Overall direction is not clear at this moment as different contradicting forces are driving the forex markets. On the one hand, commodity markets remains generally weak, with oil dropping close to $100/bl level and gold hovering near to recent low. On the other hand, carry trade unwinding cools on strong rebound in Asian stock markets. Nevertheless, the more noticeable movements are the broad based weakness in dollar and broad based strength in euro which is also reflected with EUR/USD topping the top movers chart of today so far.
Technically speaking, dollar's rebound is still retreated as a correction only, as least against Euro, yen and Swissy. Meanwhile, Euro's retreat against dollar as well as against Sterling is also treated as correction. These pairs remain the better bet on next round of dollar weakness.
Looking ahead, with an empty economic calendar in European session, focus is on Canadian retail sales, US consumer confidence in the US session. Retail sales in Canada is expected to rise 0.9% mom in Jan, up from 0.6% in Dec. Ex-auto sales is expected to rebound by rising 0.5% mom, up from -0.4% fall. Conference Board Consumer Confidence in US is expected to drop from 75 to 74 in Mar.
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