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UFXBank Forex Outlook: Dollar Weakens Despite Good Data

Written by UFXBank Research Team
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USD Dollar (USD) – The dollar weakened against most of the major currencies in Forex trading despite positive economic data, the fact that Irish leaders welcomed “substantial contingency capital funding” for Irish banks finally gave some certainty to the market and saw the dollar weaken. Unemployment Claims came out better than expected at 439.00K vs. 442.00K.  The Philly Fed Manufacturing Index was also much stronger than expected at a 22.50 vs. 4.50. The Stock Markets in U.S. closed with the Dow Jones gaining by 1.57% and the NASDAQ increasing by 1.55%. Crude Oil strengthened by 1.8% and closed at $81.85 a barrel. Gold (XAU) also gained by 1.2% and closed at $1353 an ounce. Today, Fed Chairman Bernanke is expected to speak.

Euro (EUR) – The Euro strengthened against the dollar as Brian Lenihan Irish finance minister said he would welcome a “substantial contingency capital funding” mechanism for Irish banks. The idea of contingency funds is welcomed more politically far more for banks than for states. The euro rallied more than 100 pips against the USD. The current account came out worse than expected at -13.10B vs -2.20 expected. With The pair returning to above the level of 1.3600 the trend is bullish and a long position is preferred. Overall, EUR/USD traded with a low of 1.3542 and with a high of 1.3667. Today, ECB President Trichet  is expected to speak.

EUR/USD – Last:1.3612

Resistance

1.3630

1.3660

Support

1.3600

1.3555

1.3508

British Pound (GBP) – The Pound continued to strengthen against the dollar and climbed back to hold above 1.6000 levels. Public Sector Net Borrowing came out greater than expected at 9.80B vs. 8.90B. Retail sales also came out greater then expect at 0.50% vs 0.20%. As long as the pair GBP/USD remains above 1.5950 the trend seems to be positive and a long position is preferred. Overall, GBP/USD traded with a low of 1.5887 and with a high of 1.6056. No economic data is expected today.

 

GBP/USD - Last:  1.6025

Resistance

1.6049

1.6087


Support

1.6010

1.5979

1.5945

Japanese Yen (JPY) – The Yen continued to weaken against the dollar as economic data from the US favored the Dollar over the Yen. Today’s gain puts the pair back on to its strong rally. Through the day the pair traded with a tight range until breaking out at 83.40. Although the trend is still strongly bullish the pair seems to constantly get caught in a range, capturing the breakout may be a preferred strategy. With the pair trading above 82.70 a long position is advised. Overall, USD/JPY traded with a low of 83.09 and with a high of 83.78. No economic data is expected today.

USD/JPY-Last: 83.40

Resistance

83.60

83.78

Support

83.40

83.10

83.00

Canadian dollar (CAD) – The Canadian dollar strengthened against the dollar as certainty prevailed regarding Irish debt which sent commodities and global equities to higher levels. Positive data also helped the pair’s momentum. Foreign Securities Purchases came out 12.25B vs. 9.21B and wholesale sales at 0.4% vs. 0.10%. The trend for the pair remains slightly bullish as long as the USD/CAD trades above 1.0150. Overall, USD/CAD traded with a low of 1.0155 and with a high of 1.0236. No economic data is expected today.

 

USD/CAD - Last: 1.0208

Resistance

1.0220

1.0260

Support

1.0180

1.0161

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