by Yan Xu
The greenback remains under pressure from discrepancies between the US and European economic outlook and central bank interest rates. The euro rallied to as high as 1.3615 versus the dollar today. Since the market is excited at pushing the euro and sterling further to new territories and there are few soon-to-be-released key US data which the dollar could count on, these two currencies are likely to sustain gains against the dollar in the remaining of this week.
The market will look at US weekly jobless claims and March leading economic indicators due tomorrow for more indication on the economy outlook.
EURUSD will face interim resistance at 1.36, followed by 1.3620 and 1.3650. Additional ceilings will emerge at 1.3670, backed by 1.37. Support starts at 1.3560, backed by 1.3530, 1.35 and 1.3480. Subsequent floors are eyed at 1.3450.
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The sterling climbed to 2.0133, the highest against the dollar in 26 years, after the minutes of the Bank of England’s April Monetary Policy meeting showed two policy makers voted to raise interest rates.
A better-than-expected job report boosted the currency further. UK claimant count fell 9.2k in March, more than a 3.8k drop in the previous month and beating the estimate of –5k. Average earnings rose 4.6% in the three months to February, exceeding the 4.5% level which the Bank of England considers consistent with stable inflation.
The cable retraced back to around 2.0050 versus the dollar during Wednesday US trading session, but seems stands firmly above 2.0000 key level. Based on policy makers’ sentiment shown in the minutes due today and recent upbeat economic data, we see a big chance for a rate hike by the Bank of England in May.
GBPUSD encounters interim resistance at 2.0060, backed by 2.0100, and 2.0130. Subsequent ceilings will emerge at 2.0150, followed by 2.0180 and 2.0200. On the downside, support begins at 2.0020, followed by 2.0000 and 1.9980. Additional floors are eyed at 1.9950, backed by 1.9920 and 1.99.
USDJPY encounters interim resistance at 119, backed by 119.30 and 119.50. Subsequent ceilings will emerge at 119.80, followed by 120 and 120.30. On the downside, support begins at 118.50 and 118.30, followed by 118. Additional floors are eyed at 117.70, backed by 117.50 and 117.30.
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