Dollar Weakens After Initial Claims; Euro Remains Firm After ECB Decision
Euro remains firm against dollar after ECB kept rate unchanged at 3.75% today as widely expected.
Trichet’s comments in the press conference was pretty much the same as before and no “vigilance” is used to signal a May hike. Instead, Trichet used the wordings like “monitor very closely” and remains hawkish by saying that risks to price stability remains on the upside in the medium to longer term and “acting in firm and timely manner remains warranted” in order to avoid these risks to materialize. This is inline with the expectation that ECB will likely act in June again. However, EUR/JPY retreats mildly as the yen recovers across the board in early US session.
Dollar is mildly weaker after jobless claims came in at 342k, higher than expectation of 320k. Meanwhile, both export price and import price rose more than expected in Mar by rising 0.7% and 1.7% mom respectively. Canadian dollar was boosted mildly against dollar after stronger than expected new housing price index which rose 0.5% in Feb.
EUR/USD
Daily Pivots: (S1) 1.3410; (P) 1.3425; (R1) 1.3443;
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EUR/USD turns sideway after reaching as high as 1.3477 earlier today. But short term bias remains on the upside as long as EUR/USD stays above 1.3406 support. Further rally is still expected towards 1.3668 resistance (04 high). However, 1.3406 support will turn short term outlook consolidative but the rally from 1.2865 should remain in force as long as EUR/USD stays within short term rising channel (lower channel at 1.3308 now).
In the bigger picture, outlook remains unchanged EUR/USD is still trading comfortably within medium term rising channel (1.1639, 1.2483, 1.2978) and medium term up trend from 1.1639 is still in progress. Such up trend is interpreted as having first move completed with three waves up to 1.2978, subsequent sideway consolidation completed at 1.2483. Rise from 1.2483 has made a top at 1.3364 but subsequent correction has completed with three waves down to 1.2865 already. The current rise from 1.2865 should represent resumption of this whole up trend and further rise is still in favor to retest 1.3668 (04 high).
On the downside, break of the short term rising channel will warn that rally from 1.2865 has completed and focus will then be on 1.3253 support. Break will confirm such case and bring deeper decline for a retest of the medium term rising channel (now at 1.2934).
Read full report (EUR/USD, GBP/USD, USD/CHF, USD/JPY, EUR/JPY) here.
Shing-Ip Tsui is the founder and CEO of
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