Overall, the majors posted some very strong gains during the European session against the dollar. The only exception was the pound, which was affected by negative reports coming from U.K. Ahead, the market is expected to retain the same strong momentum as in the European session, but slowly fade during the late U.S. session as we head into the weekend.  

The Euro (Eur/Usd) extended the gains seen in the previous day of trading, adding another 150 pips. Most of the gains came during the European session, and were in-line with the S&P futures, which also rose at a substantial pace. Moreover, the euro managed to break above the resistance area formed by the 20 and the 50-day simple moving averages during the overnight session. 

The German IFO Business Climate bounced from a 26-year low in April, gaining 1.6 points. The index rose to 83.7 in April, the second increase in the last 12 months. The IFO Business Climate release is inline with the other important reports coming from the region, which show that the pace of contraction has slowed over the past few months

The Pound (Gbp/Usd) fell 110 pips during the overnight session and re-tested the intra-day trend-line that held the pound on Thursday. The pound was sold during Friday’s trading session, as Moody’s is reviewing U.K’s top-notch triple-A rating for a possible downgrade. The decision to cut the U.K.’s rating could have a strong influence over the pound’s outlook. 

In the first quarter, the U.K. economy contracted by 1.9%, a much stronger decline than the expected 1.5%. At the same time, the Q4 2008 decline was revised lower to 1.6%. Currently, the U.K. economy is enduring a rather strong recession, contracting for three consecutive quarters. U.K. retail sales continue to remain resilient in the face of the economic slowdown, U.K. retail sales rose again in March, recording a 0.3% gain. From one year ago, retail sales are up by 1.5% in March, after hitting the lowest growth rate since 1995, of 0.4% in February

The Aussie (Aud/Usd) traded in a 40 pip range during the Asian and the early European session, but eventually managed to break the resistance area formed by Thursday’s high. Once the resistance was broken, the pair saw strong buy orders joining the market. 

The Cad (Usd/Cad) followed the same pattern as in the last period of trading, and moved on low volume. However, this still did not stop the pair from breaking below Thursday’s low during the European trading hours, trading in a 40 pip range so far. 

The Swissy (Usd/Chf) almost came to a standstill during the Asian session, but the pair gathered momentum ahead of the London open and continued Thursday’s decline, losing almost 100 pips so far. The pair has broken below the 20 and the 100-day simple moving averages. 

The Yen (Usd/Yen) dropped sharply during the Asian trading hours, as negative reports from the financial industry continued tonight. However, after plunging 140 pips during the Asian session, the pair retraced some of the declines during the European session. The yen has broken below the 50 day simple moving average.