The U.S. dollar strengthened against majors in the absence of economic fundamentals from major economies, yet the main concern in market today was Chain's relaxation to the pegging against dollar which pushed the yuan to the highest level since July 2005.
The dollar index, which tracks the dollar movements versus a basket of major currencies, halted its decline over the past two weeks as it surged to 85.66 compared with the day's opening at 85.16.
With regard to the euro-dollar pair, it is showing decline on the daily and 4-hour charts after hitting resistance at 1.2450. Also, momentum indicators show that the pair reversed from an overbought area doing a downside correction.
Despite the progress seen by the euro in the past two weeks, it remains under pressure as concerns regarding the huge sovereign debt in euro area countries are threatening recovery ahead of G20 meeting next weekend where they will discuss global trade imbalances.
Meanwhile, the pair is trading at 1.2374 while recording a high of 1.2468 and a low of 1.2347. For the rest of the day the pair is predicted to move between support and resistance at 1.2330 and 1.2430 respectively.
As for the sterling-dollar pair, it pared its earlier advance as it fell from a high of 1.4935 while the breach of support at 1.4856 paved the way for further decline to 1.4816. Today, U.K. lacked fundamentals but eyes will remain on emergency budget tomorrow where U.K. will announce the sharpest spending cut in decades. The pair is expected to move between support at 1.4770 and resistance at 1.4930.
Relative to the dollar-yen pair, it is showing sharp incline on the daily charts as the Chinese news caused the yen to weaken. The pair is currently trading at 91.27, recording a high of 91.47 and a low of 90.21, whereas support is seen at 90.60 while resistance is at 91.45.