Forex Today: US dollar meltdown continues, focus on UK jobs data
The American dollar finds no love despite oversold technical conditions and slipped to a three-year low below 90.00 levels in Asia. USD/JPY reportedly ran through stops on USD longs placed below 110.00, thus leading to a broad-based sell-off in the greenback. Also, USD bears are salivating at the idea of Sino-US trade row escalating to a full-fledged trade war. The list of dollar-negative developments doesn't end there... even the treasury yields are looking heavy now. For instance, the 10-year yield is trading dead flat at 2.62 percent, having declined from the 42-month high of 2.66 percent in the last two days.
What's brewing in the majors?
EUR/USD - The common currency remained bid above 1.23 in Asia, courtesy of yesterday's solid Eurozone consumer confidence number. The drop in USD/JPY below 100.00 levels gave an additional boost to the common currency, pushing it to a fresh three-year high of 1.2335. Further rally towards 1.2376 (127.2% Fib extension of the Nov low - Nov high - Dec low) could be seen if the Eurozone and German preliminary PMI numbers beat estimates and show an uptick in input and output costs. That said, the bulls still need to observe caution as ECB's Draghi (tomorrow) will likely reiterate central bank's resolve to keep monetary policy accommodative.
GBP/USD - hit a fresh post-Brexit vote high of 1.4049. Progress on Brexit front, upbeat UK CBI total trends survey and an improvement in public finances in December seems to have put a bid under the British Pound. Having rallied more than 500 pips since Jan. 11, Cable looks overbought as per the daily RSI. However, strong UK wage growth numbers (due today) could still push GBP/USD higher to 1.41 and beyond. On the other hand, the dismal wage growth figure could yield much awaited technical correction.
USD/JPY - The spot clocked a 19-week low of 109.80 and was last seen trading at weekly 100-MA level of 109.88. A slightly hawkish BOJ and fears of an all-out trade war between the US and China could keep the Yen well bid. Technicals continue to favor a near-term drop to 107.60.
Major news
Japan Flash Manufacturing PMI - Output rises at the quickest rate in 47 months.
Japan exports rose 9.3 percent year-on-year in December.
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
