[achiever]

Today, the market will likely be digesting the impact of the G20 Communiqué. Ahead of the G20 meeting, there was some expectation that the meeting's focus on the need to rebalance the global economy would be negative for current-account-deficit currencies such as the USD. The lack of an explicit mention of the role of exchange rates could lead to some scaling back of short USD positions over the short term. Even so, some analysts still believe that exchange rates will play an important part in addressing global imbalances, and this should be USD-negative over the medium term. Moreover, the market reaction is likely to be muted, given that the focus on the need to ensure that economic stimuli to remain in place was already leaked in the draft Communiqué on Friday. Fundamentally, the gradual stabilisation of the global economy and trend improvements in risk appetite to be bearish for the USD (DXY Index) as the greenback is increasingly used as a funding currency to finance investments in high-growth emerging markets (EM). Technically, the DXY Index is consolidating, with support at the 76.4% Fibonacci retracement of the up-move from 70.70 to 89.62 at 75.15% and resistance at the 55-day moving average (MA) at 78.16.

One currency that could see an immediate scaling back of long position is the euro (EUR). Over the coming months, traders expect EUR-USD to edge higher, supported by a gradual recovery in the global economy and signs that the euro-area economy is stabilising. Short-term momentum indicators for EUR-USD look stretched, with the 14-day RSI and stochastics turning lower from overbought territory. Support comes in at the 55-day moving average (MA) at 1.4332, whereas the 76.4% Fibonacci retracement of the down-move from 1.6038 to 1.2330 at 1.5162.