US dollar on the ropes ahead of EU inflation data

<p>The US dollar is trading lower this morning, with the dollar index slipping a further seven points in the Asian session. As I scan the news […]</p>

The US dollar is trading lower this morning, with the dollar index slipping a further seven points in the Asian session. As I scan the news wires and numerous research pieces, I reckon the move has been inspired by non-dollar currencies. The only dollar-related news out has been bullish in my mind as St. Louis Federal Reserve President James Bullard indicated that US rates will rise in Q1 2015. He is of the view that financial markets think the Federal Reserve is more dovish than it actually is.

There are two pieces of data released overnight that I feel emphasise the potential slowdown and concern with recent US data releases. Core inflation in Japan rose by 3.4% in May, the highest reading since 1982, as Japanese retail sales rose by 4.6% in May versus the 2.9% expected. This has the market scaling back any immediate easing from the BoJ following the sales tax increase. In New Zealand trade surplus data showed a further increase to NZD 285mn versus the expected NZD 250mn.

The data focus this morning will switch to regional inflation readings from Germany, Italy and Spain ahead of the pan EU reading on Monday, with the third Q1 UK GDP release likely to dominate the proud pound’s fortunes ahead of the University of Michigan’s confidence survey from across the pond this afternoon.

 

EUR/USD

Supports 1.3580-1.3550-1.3505 | Resistance 1.3650-1.3680-1.3720

 

USD/JPY

Supports 101.20-100.90-100.40 | Resistance 101.80-102.15-102.85

 



GBP/USD

Supports 1.7000-1.6970-1.6920 | Resistance 1.7055-1.7100-1.7140

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