Despite the improvement in the sentiment seen in the recent period, still jitters control the market; the return of liquidity into the markets following the long Easter holiday managed to support the dollar against its major counterparts. The dollar index extended its gains for the third consecutive day breaching the resistance at 81.30 to currently trade around 81.41 after setting the highest of 81.42 and low of 81.03.
For the 16-nation currency, the Greek debt worries are still agonizing the market, and the deficit burden continues to pressure the outlook for the nation, especially that the recovery might hurdle behind its peers, which is further pressured by strengthening recovery for the US economy. The euro breached 1.3460 support area and continued to head south as seen over four-hour basis targeting a retest of 1.3380 areas. Momentum indicators entered oversold areas pressuring the pair into a tight ranged trading where till now it managed to record the highest of 1.3496 and the lowest at 1.3400.
As for the royal currency, it was pressured today with reemerging election jitters and fears over the outlook for the recovery. Primer Gordon Brown today called for May 06 election from his London residence after visiting the Buckingham Palace to ask Queen Elizabeth II to dissolve the Parliament April 12. Investors fear that the election will result in a hung parliament which will further disturb a fragile economic recovery as the tight race between Labour and Conservatives continue, and mainly influenced by economic issues and their plans to bring down the record deficit.
Sterling declined strongly since the start of the day and the unexpected expansion in the construction sector, the first in two years, did not help halt the degradation. The pair is facing the 1.5300 resistance which it failed in breaching especially due to the heavy buying saturation which sent the pair lower towards 1.5136 areas after breaching the critical 1.5180 areas; sterling now targets 1.5125 then 1.5060. Until now, the pair managed to set the highest of 1.5305 and the low of 1.5127.
As for the USDJPY the pair retreated from its highest in around three months after a strong wave of profit taking sending the pair to the downside. The pair managed to breach 94.00 and currently trading around 93.80s targeting 93.60 and 93.15. So far the pair recorded its highest at 94.37 and the lowest of 93.75.