Dollar index holds firm

<p>The DXY is testing resistance at the 80.57-60 level, with the technical picture suggesting that a break here could establish a rally above 81.00 as […]</p>

The DXY is testing resistance at the 80.57-60 level, with the technical picture suggesting that a break here could establish a rally above 81.00 as we trade and close above the 200-day moving average at 80.38. The JPY has continued to trade with a bid tone, with some citing the 10-year US treasury yields that made a new yearly low overnight, as the culprit. The release of Japanese retail overnight has certainly not helped, following a drop to -13.7% from an already weak consensus of -11.7 after the retailer-front loading activity head of the sales tax increased in April.

AUD was a shining star in the Asian session following the release of capital expenditure data that is closely followed by the RBA for monetary policy adjustments. The headline number of -4.2% versus expectations of -1.5% initially sent the lifestyle currency down to the 0.9200 support level. However, as the market realised, the headline weakness was all down to the buildings and structures component that doesn’t contribute to GDP readings. The reality is that the forward looking investment showed solid growth in the machinery and equipment sector (mining) and the AUD did an about U-turn, trading back above 0.9280.

With most of Europe celebrating Ascension Day, the FX market will be driven by GDP and pending home sales data from the US this afternoon. The big question of what action the ECB will take next Thursday dominates research pieces from analysts. Will they dare to disappoint the markets again? Are rate cuts priced in now? Is outright QE a possibility?

 

EUR/USD

Supports 1.3560-1.3520-1.3480 | Resistance 1.3640-1.3675-1.3700

 

 

USD/JPY

Supports 101.50-101.20-100.75 | Resistance 101.90-102.15-102.35

 

 



GBP/USD

Supports 1.6680-1.6655-1.6560 | Resistance 1.6745-1.6785-1.6830

 

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.