The Japanese yen and US dollar advanced against majors on Friday on fears with regard the strength of global recovery, especially after Axel Weber, European central member, said the ECB should not withdraw stimulus till at least the first quarter of 2011 as he sees that it is too early to remove the non-standard measures amid the escalating fiscal woes.
Worries that global recovery is faltering are prompting investors to resort to refuges leaving behind risky assets which caused Asian and European shares to recoil today.
The dollar index, which tracks the dollar movements versus a basket of major currencies, rose to one-month high where it is currently trading at 83.00 but it slid slightly after hitting resistance at 83.15.
Concerning the euro-dollar pair, it dropped to 1.2715 but it rebounded slightly after getting support at 1.2680. Despite the strong German and euro zone GDP data released last week, the latest announcements by officials are providing evidence that the second half of the current year will witness a slowdown.
Yesterday, the Bundesbank raised growth forecasts for Germany for 2010 but said that the pace of progress will be normal in the second six months.
The euro-dollar pair so far has touched a low of 1.2683, while for the rest of the day the pair is expected to move between support and resistance at 1.2670 and 1.2780 respectively.
Turning to the sterling-dollar pair, it fell to 1.5517 after the breach of support at 1.5583 which represents 23.6% Fibonacci level to the upside trend that started since the end of May.
Fears in markets overshadowed the upbeat data released yesterday where retail sales climbed to the highest level in five months in July while budget deficit narrows better than forecasts amid the absence of economic fundamentals from major economies today.
The royal pair touched a low of 1.5462, whereas it is expected to move between support at 1.5450 and resistance at 1.5595 for the rest of the day.
With regard to the dollar-yen pair, it is moving sideways where it is currently trading near the day's opening. Policy makers at the BoJ are discussing the impact of stronger yen. So far, the pair is trading at 85.40 while support is seen at 84.55 while resistance is at 85.70.