The dollar is trading mixed since early European session, with EUR/USD gaining once again and GBP/USD keeping the support levels in tact for now as we mentioned yesterday. The markets are trading on positive territory for now, as economic numbers out of US beat estimates and got investors thinking that the worse may indeed be over for now.
The EUR/USD is trading heavily since the beginning of the week and the slide we witnessed yesterday managed to find a stop at 1.3760 a very strong support level. As long as 1.3830 keeps for today we may see a run up towards 1.40 in the coming days. The dollar does not have a clear direction for now, hence the pair’s tight ranges, therefore we need to see a clear break of either 1.40 on the upside or 1.37 on the downside before we can say that something meaningful is happening.
The economic calendar had a few important releases today, with ZEW out of Euro zone which came out much higher, giving the Europeans something to smile about and also CPI out of UK which came out higher than estimates giving the pound a push back above 1.64. The better than expected US data also helped the risk appetite returning back to the markets and generally gave investors a wave of much needed confidence after the G8 outcome. However, the PPI numbers were lower than expected, making investors think twice about rate hikes out of the FED and so for now, things are in a wait and see mode.
The current sentiment is optimistic from market participants out there, and the yen seemed to be the winner of the day as Japanese officials declared that the economy is back on track and recovery may be sooner than originally thought. The numbers out of Japan were higher, giving the yen a push and it will be interesting to monitor all data in the coming weeks in order to have a wider picture of what the next step of BOJ will be.
For now, let’s see how the dollar moves and if major breakouts will occur in the next 24 hours. The oil kept the $70 support nicely and therefore another wave up towards $75 seems the logical outcome. ..