The Japanese yen and U.S. dollar advanced against majors today on renewed fears in markets as worries regarding Chinese growth and downbeat data from Japan worsened the outlook for global recovery and thereby prompted investors to buy lower-yielding currencies as refuges amid the current financial and economic instability.
European confidence report showed surprising improvement but markets will gird for consumer confidence report from the U.S. as it is predicted to slump to 62.5 in June from 63.3.
The dollar index, a gauge of the dollar strength versus a basket of major currencies, climbed to 86.10 after the breakout of strong resistance at 85.95 where it has reached a low of 85.62 and a high of 86.19 earlier today.
With regard to the euro-dollar pair, it is showing decline for the second day on the daily charts after closing below support at 1.2327 yesterday which paved the way for further decline to 1.2192, where the pair is currently trading. Momentum indicators are giving bearish sign as seen on the daily charts but the pair may find support at 1.2100.
The euro remains under pressure especially as the G-20 leaders did not outline a clear strategy to combat debt crisis, while EU 27 leaders will meet two weeks from now to discuss banks stress tests which will determine the ability of European lenders to face financial shocks.
Today, economic confidence unexpectedly surged to 98.7 in June from 98.4 but it could not uplift the euro from its fall. Earlier today, the pair recorded a high of 1.2290 and a low of 1.2175, whereas for the rest of the day resistance is seen at 1.2300.
As for the sterling-dollar pair, it is moving to the downside but still traded above 1.50 psychological level. Today's data showed improvement in consumer credit, but the pound followed the general trend in the market which is selling higher-yielding currencies. The pair is currently trading at 1.5051, recording a high of 1.5118 and a low of 1.5010, while it is expected to move between support at 1.4960 and resistance at 1.5130.
Relative to the dollar-yen pair, it is falling for the sixth consecutive session after the breach of support at 89.30. Concerns in markets enhanced demand on the yen as a safe haven. The pair is currently trading at 88.70, recording a high of 89.41 and a low of 88.51, whereas support is seen at 88.00 while resistance is at 89.25.