A significant drop in weekly US unemployment claims helped spur dollar gains versus the major currencies. The lone exception to this price action was versus the euro where the pair surged to its highest level since November 2010 on the back of hawkish comments by the ECB. Weekly unemployment claims came in better than expected with new jobless claims falling to 368K from the previous week's 388K. Labor economists had forecasted a rise to 394K jobless claims.
At the end of the day's trading, the EUR/USD was up at 1.3960 from 1.3855. The USD/JPY surged to close higher at 82.40 from 81.83, while the GBP/USD was down at 1.6270 from 1.6312.
The drop in unemployment claims also spurred gains in higher yielding assets as the major US equity indices were up by more than 1%. The Dow Jones Industrials Average rallied by 1.59%.
All eyes now turn to the release of the US Non-Farm Payrolls report that is expected to show the US added 180K new jobs in the month of February after the economy added 36K jobs in January. However, this release may be taken with a grain of salt as the report could be subject to weather related effects. The trend of a weakening dollar looks to continue but could be reversed if the payrolls report surprises to the upside.
Following yesterday's breakout, resistance for the EUR/USD is found at 1.4080 with a further target at the trend line that falls off of the January and November 2007 highs which comes in today at 1.4150. Support is located at yesterday's low of 1.3830, 1.3700, and the rising trend line off of the February 14th low at 1.3640.