As we approach the weekly close, dollar is moving lower against all major currencies. The euro did exactly what was expected against the dollar, by breaking important 1.3960 once again last night amid thin trading conditions and gained even more today breaking higher than important 1.40. US traders are getting ready for the weekend hence the low liquidity seen across the markets and that is why the danger of further breakouts in dollar related pairs is imminent.
The EUR/USD is trading heavily since yesterday and the first resistance at 1.3960 broke easily as there were not many sellers to protect the levels. Now, next level to watch is 1.4030 and then 1.4080 which may find some sellers. It is important to note that if 1.4080 gets out of the way then further upside could easily be seen towards 1.43 as there is not a lot to keep the ranging euro bulls in line! As long as 1.3860 holds as support, all retracements in the pair could spark even more buyers as dollar gets hammered across the board.
The economic calendar has a few economic releases, with UK data coming out better than expected showing that recession may be easing and recovery may be underway. The same happened for EU data, as we had better than expected retail sales out of Germany which helped the euro on its €œjourney€ above 1.40. Also early this morning we had economic numbers out of Japan, which came out better than expected, giving investors a nice surprise and more confidence that there is light at the end of the tunnel after all! Later on today we have the preliminary GDP out of US and also consumer confidence and traders will monitor closely both numbers in order to see if the €œgreen shoots€ are real or a fairytale!
The European markets are trading on positive territory since early opening, taking their cue from Asian session and it feels like US will follow on the same path, as economic numbers seem to improve and also the market sentiment is full on positive at the moment which although helps stocks and equities, nevertheless it does damage to the greenback as it started to lose against all majors once again. The dollar has lost its safe haven status and investors are selling it off the moment they feel more positive.
In other markets, oil has risen to 6 month highs amid weakening dollar and stock€™s gains. As long as the commodity trades above $60, there may be further upside towards $70 in the coming weeks.
Let€™s see how New York opens and how the day progress till the closing and if the new found hope and euphoria lasts for more than a few days€¦