The 16-nation currency failed to continue yesterday's advance when it rebounded from the lowest level since 2006 against the dollar as the split among European policy makers is reducing confidence in the single European currency, thereby prompting investors to sell the euro and buy refuges. The dollar index, which tracks the dollar movement vis-à-vis six major currencies, soared to 86.37 after closing yesterday at 86.15, while it is predicted to find resistance at 87.69 and support at 85.95.
With regard to the euro-dollar pair, it dropped slightly today after the successful rebound seen yesterday when the pair inclined after getting support at 1.2123. The split prevailing among European officials with regards their fiscal policies to prevent further depreciation for the euro is reducing confidence. An elite ECB policy maker mentioned today that Germany did not inform the ECB with the ban on naked short selling it introduced yesterday while France mentioned it is not going to adopt the German prohibition. European officials unveiled 750 billion euros bailout last week to be provided to highly indebted countries in the region while currently they are looking for other new measures to regain stability.
However, Jean-Claude Junker, leader of the European finance minister, sees there is no need for immediate intervention to save the euro from declining further. Tomorrow, Germany will launch new policies for cutting deficit rapidly by imposing strict penalties on counties that violate rules. Meanwhile, the pair is trading at 1.2360 while reaching a high of 1.2436 and a low of 1.2320. For the rest of the day, the pair is predicted to move between support and resistance at 1.2320 and 1.2295 respectively.
As for the sterling-dollar pair, it fell to 1.4346 while it is currently doing attempts to stay below support at 1.4338. Today's news showed retail sales retreated in April to 0.3% from the revised 0.5%, yet better than forecasts of 0.2%. Still, the British government has to cut the deficit without hurting recovery that started to gather momentum which is a challenging task for the new coalition government. Now, the pound is trading near the lowest level in 13 months versus the greenback, after recording a high of 1.4464 and a low of 1.4317, whereas it is expected to move between support at 1.4250 and resistance at 1.4440.
Relative to the dollar-yen pair, it is moving south on the daily charts for the third day amid the ongoing debt woes in Europe which is enhancing demand on the yen as a safe haven. The pair is currently trading at 91.30 after hitting a high of 91.87 and a low of 90.83, while support is seen at 91.00 and resistance is at 92.30.