The dollar slipped lower against the majors as surging crude oil prices continue to weigh on the currency, falling near the 1.58-level against the euro and 103 versus the yen. US equity bourses continued to struggle with the Dow Jones and Nasdaq expected to close at its worst weekly performance in over three-months. We expect the greenback to extend losses into next week with interim targets at 1.59 against the euro and 102 versus the yen.
Existing home sales data was slightly better than expected, down 1% to 4.89 million units in April versus 4.93 million units a month earlier. However, the unsold homes inventory spiked by 10.5% to 4.55 million units - its highest level since the measure was first tracked in 1999. Further reaffirming the struggles facing the housing market, the median price for existing homes dipped by 8% in April compared with a year earlier.
GBP Edges Higher
The sterling crept higher against the dollar, pushing toward 1.9850. The 2nd release of UK Q1 GDP was unrevised at 0.4% q/q and 2.5% y/y. Nonetheless, economic growth remains sluggish in the UK and will likely keep the Bank of England in its current bind, with inflation creeping higher and soft growth prospects.
Cable retreated slightly, dipping near 1.9780 with support seen at 1.9740, followed by 1.97 and 1.9660. Additional floors will emerge at 1.9630, backed by 1.96 and 1.9550. On the upside, resistance is eyed at 1.98, followed by 1.9850 and 1.99. Subsequent ceilings are seen at 1.9925, backed by 1.9960 and 2.
The yen advanced toward the 103-handle against the dollar amid sustained pressure in the price of oil and declines in equities. We look for USDJPY to test near the 102.60-region, which marks the neckline for a double-top formation. A breach of 102.60 paves the way for a move toward 99.50.