Dollar dips again

The greenback has pulled back against the euro and pound ahead of the Federal Reserve minutes that will be released tonight.

Source: Bloomberg

Euro eyes Greek deal
The euro has gained ground overnight – but not due to confidence in the single currency; the move was attributed to a broad dip in the dollar. The focus is still on Greece, and the indebted country is due to repay the International Monetary Fund €460 million tomorrow. Even though this would go a long way to repairing the country’s tattered reputation, its dealing with Russia is creating concerns within Brussels.

The meeting between Alexis Tsipras and Vladimir Putin yesterday caused concerns in Europe, as it could lead to Greece running away from its obligations with the assistance of Russia. Moscow is already out in the cold over the situation in Ukraine, and any assistance to Athens would setback both nations’ relationship with Europe, which will put pressure on the euro.

EUR/USD is encountering resistance at the 200-hour moving average of $1.0860, if this level is held the support at $1.08 will be brought into play. A move through that metric will make $1.0720 the target. If the 200-hour moving average is cleared, $1.09 will be the initial target and then the resistance at $1.0950 will be in sight.

Pound pushes higher
Sterling is driving higher against the dollar as the pound takes full advantage of the soft greenback in overnight trading. GBP/USD has a couple of busy trading sessions ahead of itself, starting with the Federal Reserve minutes tonight at 7pm, and the Bank of England meeting tomorrow.

The pound benefitted greatly from the dovish commentary from the Fed last month, and tonight’s report will shed more light on the reasoning behind the language that was used. GBP/USD has been trading within a tight range recently, and the Fed minutes will add much needed volatility. The US is still well ahead of the UK in the race to raise interest rates, and this will keep the GBP/USD in its long-term downward trend.

The 200-hour moving average is providing support at $1.4850, and if this mark is punctured $1.48 will become the target. The upside target is $1.49, and beyond that traders will look to $1.4940 region.

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