Dollar dominates

EUR/USD and GBP/USD are suffering today as the greenback is gaining momentum.

GBP/USD
Source: Bloomberg

Euro sub $1.09
The small rise in the German consumer climate reading this morning failed to hold back the tide of uncertainty surrounding Greece. The strongest economy in Europe saw its GkF report rise to 10.2 in May, up from 10.1 in April, but even though EUR/USD ticked higher on the back of it, the move was short-lived.

Greece has until the end of the month to reach a deal and there is no sign of a one been brokered in the near future. Athens is due to make a repayment to its creditors on the 5 June, and if the nation does not unlock the next round of the bailout, the country will be facing default.

EUR/USD has been in a downward trend for the past week and the initial target is $1.08. If that mark is punctured then the next level of support will be $1.06. We are currently seeing $1.09 acting as immediate resistance, but a move above it will bring $1.10 into play.

Sterling keeps sliding
GBP/USD is drifting lower as the dollar attracts buyers on the back of positive durable goods and consumer confidence numbers yesterday. These reports suggest that US consumers are going out and spending money again. As Joshua Mahony stated, a rate hike in the US is on the horizon, and now that the UK is in deflation, this will keep the pressure on GBP/USD.

We are not expecting any economic announcements from the UK or US today, and the UK government is expected to outline its intention to hold a referendum on its EU membership. Sterling survived the political uncertainty of the UK general election and now it must face the EU question.

GBP/USD has been trading lower for over a week now and the $1.5250 area is the initial target, and below that support will come into play at $1.50. A move higher will encounter resistance at $1.54, and beyond that traders will look to $1.57 and $1.58 as upside barriers.

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