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USD stemmed decline overnight - TD Securities

TD Securities team of analysts see EUR/USD consolidating in the 1.26/1.27 range.

Key quotes


"For a while now we have been cautioning about the increased likelihood of a temporary correction in what still remains a well-supported longer term appreciation trend for the big dollar."

"The push higher upon the release of a stronger than expected non-farm payrolls on Friday perhaps presented a good opportunity to book profits on USD longs after the 12-week winning streak looked increasingly vulnerable amidst a soft patch in US data."

"In line with this, CFTC data last week showed net USD long contracts at the highest level since late-May of last year when former Fed Chairman Bernanke first talked about tapering, and within the highest levels overall since 2007."

"Overnight the USD has stemmed its decline and it is showing small gains against most majors at the moment. On the charts, EURUSD appears to be attempting to form a base around 1.26 the figure and it seems poised for consolidation in the 1.26/1.27 range."

"USDJPY, on the other hand, retains a heavier look on the daily chart, although it was once again unable to extend the downward move beyond 107.80 overnight and yesterday's low at 107.75 remained untested. At this point we are inclined to think a break below 107.10 would be required in order to cement this incipient temporary retracement."

"Today the minutes of the September 16-17 FOMC meeting will come into focus, as the market attempts to gauge the extent of divergence amongst the participants regarding the appropriate time for lift-off beyond the two hawkish dissenters, who will no longer be voters next year."

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