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UFXBank Forex Outlook: Dollar Drops on Good Data

Written by UFXBank Research Team
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USD Dollar (USD) – The Dollar lost the positive momentum it had had for the last few days after positive macro data in the U.S. signaled improvement. The ADP Non Farm Employment change came out at 93k, better than the expected 70k, the ISM Manufacturing PMI came out at 56.6, better than an expected 56.4, and therefore investors jumped back to riskier assets. The Stock Market in the U.S. soared as the Dow Jones increased by 2.27% and the NASDAQ gained 2.05%. Crude Oil jumped upwards more than 3%, closing at $86.70 a barrel. Gold (XAU) advanced by 0.2%, closing at $1387 an ounce. Today, Unemployment Claims are expected at 425K vs. 407K previously. Pending Home Sales are expected at -0.7% vs. -1.8% previously.

Euro (EUR) – The Euro rallied versus the dollar for the first time in 4 days of Forex trading on speculation that the ECB might put efforts to restrain the spread of the euro zone's debt crisis. German Retail Sales came out at 2.3%, better than the expected 1.3%. Holding above the support level of 1.3040 turns the momentum positive for the pair. Overall, EUR/USD traded with a low of 1.2970 and with a high of 1.3180. Today, The PPI is expected unchanged at 0.3%. The GDP is expected unchanged at 0.4%. The Minimum Bid Rate is expected unchanged at 1%.

EUR/USD – Last:  1.3111

Resistance

1.3180

1.3260

1.3300

Support

1.3080

1.3040

1.2970

British Pound (GBP) – The Pound gained versus the dollar after Wall Street jumped to fresh monthly highs on renewed signs of strength in the US economy and returned risk appetite back in the markets. The Nationwide HPI came out unchanged as expected at -0.3%. The Manufacturing PMI came out at 58, better than the expected 54.8. Holding above the support level of 1.5550 might push the pair upwards as oversold conditions are seen in the pair. Overall, GBP/USD traded with a low of 1.5546 and with a high of 1.5647. Today, the Construction PMI is expected at 51.3 vs. 51.6 previously.

GBP/USD - Last: 1.5609

Resistance

1.5640

1.5730


Support

1.5550

1.5500

Japanese Yen (JPY) – The Yen was among the only currencies that weakened against the dollar after the FED’s speech about steps that were taken in order to stabilize the markets during the crisis. The Capital Spending came out at 5%, worse than the expected 6.1%. Breaching the 84.40 level might push the pair upwards. Overall, USD/JPY traded with a low of 83.37 and with a high of 84.38. No economic data is expected today.

USD/JPY-Last: 84.10

Resistance

83.80

84.40

Support

83.40

82.80


Canadian dollar (CAD) – The U.S. Dollar lost gains against Canada's dollar as investors moved towards riskier assets, including currencies related to commodities, on speculations raised by the ECB's calls for support in stopping the spread of the regional debt crisis. Holding below the 1.0240 resistance level turns the momentum to negative for the pair. Overall, USD/CAD traded with a low of 1.0139 and with a high of 1.0269. No economic data is expected today.

USD/CAD - Last: 1.0181

Resistance

1.0230

1.0285


Support

1.0140

1.0080