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.

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. 

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.