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UFXBank Forex Outlook: Euro Drops on Dollar's Big Day

Written by UFXBank Research Team
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USD Dollar (USD) – The Dollar gained against most of the majors in as China unexpectedly raised the interest rates out of concern that the global economic growth is spurring demand for safety currencies. Building permits came out 0.54M, worse than the expected 0.58M. Housing Starts came out 0.61M, better than the expected 0.59M. The Stock Markets in the U.S. closed negative with the Dow Jones losing -1.48% and the Nasdaq declined by -1.76%. Commodities tumbled with Crude Oil dropping by more than -4.3% and closing at $79.50 a barrel. Gold (XAU) plummeted by $40 to close at $1331 an ounce. Today, The Fed's Beige Book will come out.

Euro (EUR) – The Euro lost previous Forex trading gains versus the dollar, falling as much as 300 pips and momentarily breaking the 1.37, level but quickly jumping back to 1.375 zones. Overbought conditions lead investors to take profit. The German Zew Economic sentiment came out -7.2, worse than the expected -7, which also supported the weakness of the Euro. Trading below the 1.3780 resistance level keeps the momentum negative for the pair. Overall, EUR/USD traded with a low of 1.3696 and with a high of 1.4002. Today, the German PPI is expected at 0.2% vs. 0% previously.

EUR/USD – Last: 1.3773

Resistance

1.3790

1.3860

1.4000

Support

1.37


British Pound (GBP) – The Pound collapsed versus the dollar as the Chinese rate hike triggered buying pressure for the dollar. CBI Industrial Trends Orders came out at -28 worse than the expected -19, which also supported the weakness of the Sterling. Trading below the 1.5770 resistance level keeps the momentum negative for the pair. Overall, GBP/USD traded at a low of 1.5649 and a high of 1.5935. Today, The MPC Meeting minutes are expected. The Public Sector Net Borrowing is expected at 14.2B vs. 15.3B previously.

GBP/USD - Last: 1.5727

Resistance

1.5740

1.5770

1.5840

Support

1.5650

Japanese Yen (JPY) – The Yen was among the strongest performers against most of the currencies but still no breakthrough was seen versus the dollar as it seemed capped in a range between the 80.90 support and 81.90 resistance boundaries. Breaking the boundary levels will take the pair to new trading levels. Overall, the USD/JPY traded at low of 80.84 and a high of 81.91. No economic data is expected today.

USD/JPY-Last: 81.35 

Resistance

81.90

82.80

Support

80.90


 

Canadian dollar (CAD) – The U.S. dollar gained against Canada's dollar for a fourth day as the BOC kept the interest rate unchanged at 1%, reducing its economic growth forecast. Commodities markets were crushed with Crude Oil losing more than -4%, which also supported the weakness of the Loonie. The USD/CAD pair seems to be on a bullish trend as long as the pair remains above the 1.0220 support level. Overall, USD/CAD traded with a low of 1.0160 and with a high of 1.0372. Today, Wholesale Sales are expected at 0.5% vs. -0.1% previously and later, the BOC Monetary Policy Report will come out.

USD/CAD - Last: 1.0295

Resistance

1.0280

1.0360

Support

1.0220

1.0140