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Dollar pushes ahead

The dollar is still pushing higher and in turn driving GBP/USD and EUR/USD lower as we approach Friday’s US jobs report.

Euro notes
Source: Bloomberg

Sterling slides again

GBP/USD is still in the downward trend that began when the better-than-expected core inflation figures from the US set the wheels in motion for the dollar’s bull run. Despite the fact that the UK construction PMI report jumped to a four-month high it couldn’t hold back the strength of the greenback.

At 9.30am (London time) the UK will release the services PMI report for February, and the market is expecting a reading of 57.6 compared with a reading of 57.2 in January. The UK services sector accounts for 78% of the country’s economic output, and should the figure disappoint it could spark short-term selling.

The bias is to the downside and GBP/USD is receiving support at in the $1.5340 region – a move through this level is will make $1.53 the target. A leg above the 50-hour moving average of $1.5372 will bring the resistance at $1.54 into play, and if that level is cleared traders will look to $1.5440.

Spot FX GBP/USD chart

Euro edges lower

EUR/USD has been trading sideways this week and most of its time has been spent within the $1.12-$1.1160 range – it is currently at the lower end of this range. The rally that the greenback encountered last week has taken its toll on the single currency and there is no sign of a correction on the horizon.

The eurozone will reveal the retail sales for January at 10am and the consensus is for an increase of 0.2%. It is worth noting that yesterday’s German retail sales report smashed estimates but failed to drive EUR/USD higher, and a soft report from the eurozone today will push the euro towards $1.11.

The $1.1180 level is currently acting as resistance and if held it will bring the support at $1.11 into play. A move through $1.1180 will make $1.12 the initial target and then the resistance at $1.1240 will be the next goal. 

Spot FX EUR/USD chart

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