Economic data supported the US dollar, but sunk the euro
The euro expanded its losses versus the US dollar. The common currency reached its lowest level since the end of June because of the rising concerns among the traders for the further slowdown in the eurozone economy. Traders also increased their exposure to the US dollar after ADP private sector jobs unexpectedly increased 9 thousand in July, defying expectations of a sizable decline. Some economists are upwardly revising their forecasts for the July non-farm payrolls report that will be released on Friday.
In eurozone news, EMU-15 July economic sentiment fell to 89.5, its lowest level in more than five years. Some traders believe the ECB will reduce its assessment on economic growth at next week’s Governing Council meeting. The yen depreciated against the US dollar as traders continued to speculate the Japanese economy will weaken further. Most traders believe Bank of Japan’s Policy Board will keep the overnight call rate unchanged at 0.50% for the foreseeable future.
Data released in Japan saw June industrial output fall 2.0% m/m, worse-than-expected, and was up 0.2% y/y. The British pound traded higher against the US dollar as traders are awaiting details of a possible government-sponsored program to swap mortgage assets for gilts.
TECHNICAL OVERVIEW
EUR/USD
The euro fell modestly and was traded in range around 1.5580 levels. On the downside direction, supports are seen at 1.5450, followed by 1.5365 and 1.5240. If the euro reverses the trend, it will expect first resistance at 1.5750, followed by 1.5890 and 1.5950.
EUR/USD (chart, table)
USD/JPY
The dollar traded in range against the yen and moved around 108.00 levels, which is the key resistance for dollars’ upward trend. On upside, resistance is seen at 108.60, followed by 110.10 and 111.70. On the downside, first support is expected at 107.00, followed by 106.40 and 105.70.
USD/JPY (chart, table)
GBP/USD
The sterling rose against the dollar and was supported around 1.9750 levels, which seems to be 50% fibo-retracement of 1.9364-2.0394 and was limited around 1.9840. If the sterling expands its gains, it will meet first resistance at 1.9850, followed by 1.9970 and 2.0050. The supports are seen at 1.9750, followed by 1.9670 and 1.9545.
GBP/USD (chart, table)
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31.07.2008 FX daily review.pdf, 170 Kb
