Optimism still predominant in currency market as seen major currencies movements today as the stress test results eased concerns in the EU, boosting risk taking by investors.
It can be mentioned confidence was resorted in markets after the stress test results, which showed that out of 91 EU banks, 7 failed to pass the test.
In addition, the better-than-estimated economic data released recently mirrored that economic recovery is gaining momentum and debt woes are retreating as the test results reflected the strength of the financial sector.
On the other hand, the bounce in stocks and the stellar earnings announced by large companies and banks added signs of recovery.
All these factors sapped demand on refuges led by the yen which fell against majors, while the U.S. dollar is consolidating against a basket of major currencies as seen by the dollar index, which is currently trading close to the day's opening at 82.06 after recording a high of 82.25 and a low of 81.91, where it is gaining support at 81.90 levels.
Regarding the euro-dollar pair, it is showing slight incline on the daily charts to continue the upside trend that began on June 8 as debt crisis started to ease. Today, German GFK consumer confidence for August surged to 3.9% from the revised 3.6%, which took the pair to a high of 1.3020 approaching strong resistance at 1.3045.
Meanwhile, the pair is trading at 1.3022, near the highest in two months, after visiting a low of 1.2962, while it is predicted to move between support and resistance at 1.2935 and 1.3065 respectively.
As for the sterling-dollar pair, it continued its rally for the fourth consecutive session in the absence of economic fundamentals from the United Kingdom, boosted by confidence in markets. The pair is currently trading at 1.5542 after breaching strong resistance at 1.5497, which may pave the way for the pair for further rise. The pair recorded a high of 1.5545 and a low of 1.5440 earlier today, whereas it is expected to move between support at 1.5455 and resistance at 1.5560 for the rest of the day.
Concerning the dollar-yen pair, it inclined on the daily charts, to halt the downside trend that started in May. Despite the improvement in U.S. new home sales and durable goods data, the dollar remains under pressure due to uncertainties surrounding the U.S. economy. Later on today, U.S. S&P/Cs 20 city is due to be released along with consumer confidence, where both are expected to show decline.
For now, the pair is trading at 87.41, recording a high of 87.47 and a low of 86.81, whereas support is seen at 86.80 while resistance is at 88.00.