Dollar struggled at three month lows versus the euro

Good morning from beautiful Hamburg and welcome to our last Daily FX Report for this week. Asian shares gained in early trading on Friday, on track for a weekly rise, after Wall Street cheered a cool reading for producer price inflation that chilled expectations of a Federal Reserve rate hike. MSCI's broadest index of Asia-Pacific shares outside Japan was 0.3 percent higher, poised to gain about 1 percent for the week. Japan's Nikkei stock index was up 0.5 percent, set for a 1.5 percent weekly rise. On Wall Street, all three major indexes gained more than one percent, and the S&P 500 closed at a record. A spate of U.S. economic data painted an improving employment picture, but subdued producer price inflation quashed bets that the U.S. central bank would raise interest rates sooner rather than later this year.

Anyway, we wish you a successful trading day and a relaxing weekend!

Market Review – Fundamental Perspective

The dollar struggled at three month lows versus the euro early on Friday but encouraging news on the U.S. labour market helped it recover some ground against a host of other currencies. Data on Thursday showed the number of Americans filing new claims for unemployment benefits fell last week towards a 15-year low. Indeed, the dollar stayed on the defensive against the euro and sterling, which climbed to three- and 5-1/2 month highs of $1.1445 and $1.5815 respectively. Both currencies were just off those peaks in early Asian trade. That left the dollar index wallowing at four-month lows. The index is down 1.4 percent so far this week and has dropped more than 7 percent from a 12-year peak of 100.39 set in March. Yet, the dollar fared better against the yen and the Antipodean currencies. It last stood at 119.23 yen, having bounced off a two-week trough of 118.885. There was little market reaction to comments by European Central Bank President Mario Draghi on Thursday, who sought to assure markets that the ECB is fully committed to rolling out its trillion-euro-plus bond buying programme. The Australian dollar slipped to $0.8083 from a near four-month peak of $0.8164, while its New Zealand peer recoiled to $0.7488, from a one-week high of $0.7564. Crude oil futures edged down, with U.S. June crude shedding about 0.2 percent on the day to $59.78 a barrel, after dropping overnight on supply glut fears. Spot gold was on track for a weekly rise of more than 2 percent but was flat on the day at $1,221.20 an ounce after hitting a three-month high overnight as the USD`s weakness made it more appealing to investors holding other currencies.

Daily Technical Analysis

EUR/USD (Daily)

Since June the bears took control over this currency pair and the euro experienced a sharp decline versus the USD and even reached its lowest level for more than 10 years. After experiencing this decline to a level of around $1.04, the EUR was able to regain a bit and is now traded at around $1.14, where it may stay for a while should the resistance at around $1.14 hold. Otherewise a rise clearly above the mentioned level seems to be not unlikely.

Support & Resistance (Daily)