| CATEGORY: FX |
FX afternoon update - Sterling slips back after upbeat ECB while dollar drifts |
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By Michael Hewson
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Thu 03 Dec 2009
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LONDON (SHARECAST) - The pound lost ground against its basket of currencies including the Euro and the dollar today, after UK PMI came in slightly less than expected, and the European Central Bank adopted an upbeat outlook for the Euro zone going into 2010.
The dollar index was also slightly firmer, while equities drifted sideways, as traders were reluctant to drive the market into new areas, ahead of tomorrows US employment report.
EURUSD - the Euro traded back to its previous highs around 1.5145, post ECB, but lacked the momentum to drive any higher, as it continued its slow relentless climb higher.
The subsequent drift back this afternoon stalled around 1.5060. A move back below yesterday's lows at 1.5030, would target 1.4975/80, while any break above 1.5145 could well target 1.5290.
However, in the absence of any external factors, neither seems likely ahead of tomorrows data.
GBPUSD - failed to break above the 1.6740 resistance area and after the slightly weaker PMI this morning started to drift lower, which combined with a slightly firmer dollar, has sent the pound back below 1.6640 and should send it back towards the support at 1.6475/80.
EURGBP - the Euro managed to hold above the key 0.9030 support area, breaking back above the 0.9070 area, and has continued to make gains after the upbeat ECB statement this afternoon. Momentum should remain positive while above 0.9030 and a test of 0.9270 remains the longer term target, but it needs to get above this weeks highs around 0.9155 first.
USDJPY - has continued to find support at progressively higher levels. The rally has so far respected the trend line resistance from the 27th October highs, coming in just above 88.50. While below this level the down trend should continue, but a break above this line could well trigger a sharp short-covering rally towards 90.00.
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