Dollar drives higher

GBP/USD and EUR/USD are under pressure as the market fears  an interest rate rise from the US in June. 

Dollar bills and pound coin
Source: Bloomberg

Pound sees decent halts

GBP/USD has been trading sideways overnight and consolidated in the $1.5090 region. There has been a slight correction in the last few hours but it has failed to claw back the ground it lost over the previous two weeks. On a positive note the currency pair has stopped its downward decline, but that is not to say the bulls are waiting in the wings.

The collapse in the value of the pound has mostly been driven by the strength of the dollar. The UK manufacturing report, due at 9.30am (London time), will spark short-term buying should the estimate of 0.2% be exceeded.

The $1.51 mark is acting as resistance and if this level is held it will bring the support at $1.5050-$1.5040 into play. A move below that will make $1.50 the target. If $1.51 is cleared the 100-hour moving average of $1.5135 will become the initial target, and beyond that dealers will look to $1.52.

Euro still falling

EUR/USD is trading lower this morning as momentum behind the declining currency pair is picking up. As Alastair McCaig stated, the beginning of the government bond-buying scheme by the European Central Bank put enormous pressure on the single currency, and now the market is pricing in a rate rise from the Federal Reserve in June. The currency pair is coming under fire from all sides, as the fresh political uncertainty in Greece is also fuelling the selloff. 

We are not expecting any major economic announcements from the eurozone today but the existing concerns about Greece and the Fed will be enough to keep the downward trend in place.

The $1.07 mark is providing resistance and if that level holds, $1.06 will be the target. EUR/USD is oversold on an hourly and daily basis and a pullback is possible. A move above $1.07 will bring $1.08 into sight.

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