Forex snapshot

The dollar remains a favoured area, with an in-line US services PMI reading helping to keep sentiment towards the US currency fairly bullish.

1000 Yen and US dollar notes
Source: Bloomberg

Dollar lifted by PMI data

Having failed to make much progress today the dollar has pushed up, enlivened by a better US services PMI reading. Ultimately, however, the pair needs to break through ¥103 for any hope of seeing further gains to the upside.

If ¥103 is breached then the next target is ¥104, the high from early April, but caution should be exercised given that the daily relative strength index is still flashing an overbought reading.

With intraday indicators also flashing overbought there is the possibility that a pullback will occur, but the ¥102.40 level should provide support, as it has done in the previous two sessions.

Further gains expected in USD/CAD 

US dollar strength continues to enliven this currency pair, seeing it push to its highest level since the beginning of May, at C$1.0940. However the daily RSI sends the message that a pullback may be needed here too, with the ideal area being a drop back towards the current uptrend at C$1.0870.

With the 50-, 100- and 200-hour moving averages all pointing higher there is more room for gains in USD/CAD. So long as risk appetite remains low among investors then this currency pair should see further upside, with the $110.40 area being the first target.

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