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Overall, the dollar index declined for a second consecutive day during the overnight session. Despite the previous day of trading, the major currencies gathered more momentum and were actually able to break important swing areas, something that usually does not happen on Thursdays. The dollar’s outlook lies to the downside, as the global economy is slowly recovering. Ahead, the market is expected to maintain strong volume during the U.S. session, but then slowly fade in the late U.S. trading hours. 

The Euro (Eur/Usd) rose 80 pips during the early part of the overnight session, but the pair stalled as soon as it hit TheLFB R1 (1.4015). Consequently, the euro wasted much of the European session trading side-ways below the pivot point. If the pair breaks higher, the euro should target the 1.4050 area, the current high of the year.

Euro-area May inflation, as measured by the Flash estimate, dropped to 0.0%, the lowest level on record. Over the last few months, the inflation gauge has dropped sharply, reflecting tougher credit conditions and the rather huge declines in the commodity markets. The Euro zone M3 number hit the wires at 4.9%, higher than what analysts had previously estimated, but still lower than March’s number. The number for the month of March was revised to 5.0%, slightly lower than the initial release.

The Pound (Gbp/Usd) gained as much as 150 pips overnight, and is now testing the 1.6080 area, which is the current high of the year. Over the last four days of trading, the pound made a number of patterns on the daily chart that showed investor’s indecision.

U.K. house prices rose unexpected in May, being the second increase in the last three moths. The average price for a U.K. house in May reached £ 154,016, up 1.2% from April. The annual rate of decline is now standing at -11.3%, from -15.0% in April.
The Aussie (Aud/Usd) rose strongly during the overnight session, as the commodity market appears to have entered into a new bull market. The pair gained 100 pips, but retraced some ground as the pair hit TheLFB R2 (0.7930). The aussie is currently trading at the highest value during the last nine months, approaching the 50% retracement of the downtrend that lasted from 07/15/08 to 28/10/09

The Cad (Usd/Cad) fell 100 pips since the Friday session started, easily breaking below the 1.1100 level, where the pair bottomed over the last two days of trading. The cad is currently catching up with crude oil, which broke another important swing area on Thursday, the $65 level. 

The Swissy (Usd/Chf) managed to break below the support level of the last five days of trading, the 1.0810 area, during the overnight session. Despite this, the pair was still unable to move decisively lower during the European session, but traded sideways, slightly under the resistance level. For now, the swissy’s outlook lies to the downside. 

The Yen (Usd/Yen) bounced off the trend-line that connects the 3/19 and the 4/28 lows during the late U.S. session. As such, the yen lost 60 pips during the overnight session, breaking below the neutral pivot point (96.50) and below the 20-day simple moving average. 

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