Euro Accelerates Advance Following Better Than Expected IFO Report

The Euro is trading with some remarkable upward momentum against the dollar this morning after the German IFO report turned out better than expected ( forecast 82.4 actual 83.7).

EURUSD was already in an upside momentum before the report, breaking the two resistance levels 1.3041 and then 1.3094 which were mentioned on yesterday’s post.

This morning the pair is trading well above 1.32 with a next week possible target of 1.3336. This level also marks the pair’s next resistance area.

The British pound was lagging behind other majors in its advance against the dollar this morning, thats ahead of the U.K GDP and Retail Sales reports due at 9:30 GMT. It is possible that later on the pound will join the party and target 1.47 or higher, but that play is likely only for as long as the above reports will not cripple whatever momentum the pound has against the dollar at this stage.

Later into the trading day we have the U.S Core Durable Orders (13:30 GMT), and the New HomeSales reports (15:00 GMT). These might affect risk aversion/risk appetite cycles in the market - with a worse than expected results possibly rising demand for safe haven currencies and the opposite.

Worse than expected Retail Sales in U.K pressure the Pound

A report this morning is showing retail sales in U.K dropped by -1.9% , much worse than the expected -0.3% , in the forex arena this translates to Pound downside pressure entering the first trading hours of the London session.

Generally, the market remains lucked in an anti-dollar environment, as we have yet to experience a serious retrace preformed by any of the major pairs yesterday. This might limit GBPUSD downside potential today.

As for EURUSD, the lower it could drop yesterday was 1.3414, which now marks its most important support area. The pair saw some high volatility around 12:00 GMT after U.S. Treasury Secretary Timothy Geithner’s commented on television he was open for changes concerning the status of the dollar as the world’s reserve currency. The volatile move ended with little change after Geithner repeated and said the dollar would keep its status as the top reserve currency for a long time.

Next important report today would be the U.S Unemployment Claims at 12:30GMT, a report which indicates the number of individuals who filed for unemployment insurance for the first time during the past week,
the forecast number is 649k.