The dollar slid across the board as the impact of the bond yield on the greenback is still seen. The euro held firmly above 1.34 versus the dollar despite weaker-than-expected German IFO report.
The IFO business climate index fell from 108.6 to 107 in June, falling short of the estimate of 108.4. The expectations index came out at 102.8, down from 104.8 in the previous month. The current assessment index declined to 111.4, below the estimate of 112.5 and the prior reading of 112. Though the numbers are not exciting, they are still of high levels compared with historical data. This did not affect the expectations that the ECB will raise rates at least one more time this year. ECB chairman Trichet said the bank will continue its tightening process to ensure price stability. Therefore, the euro has the fundamental support to rally further against the dollar in the medium term. The pair broke the obstacle at 1.3440, and is likely to rise further to test 1.3480 and even 1.3520.
GBPUSD encounters interim resistance at 2.0000, backed by 2.0040 and 2.0080. Subsequent ceilings will emerge at 2.0100, followed by 2.0130 and 2.0150. On the downside, support begins at 1.9950, followed by 1.9930 and 1.99. Additional floors are eyed at 1.9880, backed by 1.9850 and 1.9830.
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