FX News – October 16: DXY Tumbles, Recovers

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The US Dollar Index (DXY) ended its healthy run during yesterday's US session. This was after the US government showed no signs of any end to its stalemate on the issue of health care.

However, ever since reports came out later on that the House Republicans would finally agree with the deal being negotiated in the Senate, the greenback rallied again, at least against the yen.

The USD/JPY pair seesawed over the past few hours, especially during the US session. Late into that session, the pair dropped to around 98.06. However, with the news that the stalemate might finally end, the pair rallied up again just above the 98.55 area. It is currently trading at 98.54, with initial resistance seen at 98.45 followed by 98.70. Meanwhile, initial support is at 97.73, followed by 97.48.

In New Zealand, the CPI data released earlier gave a signal that inflation has finally bottomed out and may start going up again next year. The QoQ CPI was as expected at 0.9%, while the CPI on a YoY basis ended up at 1.4%, which is a little higher than the expected 1.3%.

The CPI data, along with the troubles of the US government helped the NZD/USD pick up late in the US session. Today, it reached a peak at around the 0.8410 zone so far, and is currently trading at 0.8400. Initial resistance for the pair is at 0.8421, followed by 0.8442. Meanwhile, initial support is at 0.8362, followed by 0.8341.

The aussie also benefited yesterday with the drop in the DXY as it traded at peaks around the 0.9540-0.9545 zones. It dropped slightly at the open of the Asian session, and is currently trading at 0.9526. Initial resistance for the pair is at 0.9572, followed by 0.9595. Meanwhile, initial support is at 0.9500, followed by 0.9476.

By FX Strategy Team, Published on 16th of October 2013
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