Market Analysis: Dollar Falls from 10-month High

EUR/USD

The euro rose on Thursday as the dollar retreated since investors remained cautious ahead of key inflation figures due on Friday. Data on Thursday showed the US economy maintained fairly strong growth in Q2, with an unrevised annual rate of 2.1%. The second report showed that in the week ending Sept. 23, initial claims for state unemployment benefits rose by 2,000 to a seasonally adjusted 204,000. Economists had forecast 215,000 claims for last week. Contracts for the purchase of existing US homes also fell more than expected in August, falling the most in nearly a year as high mortgage rates undermine affordability. Personal consumption data, due Friday, will be the next source of information on US inflation. The immediate resistance can be seen at 1.0572, and a breakout to the upside could trigger a rise towards 1.0619. On the downside, immediate support is seen at 1.0503, a break below could take the pair towards 1.0491.

At the lows of the week, a new downward channel has formed. Now, the price is near the upper border of the channel and may continue to decline.

GBP/USD

The British pound snapped a six-session losing streak on Thursday as the US dollar’s relentless rally stalled but was still on track to fall nearly 4% this month as markets lowered expectations for a Bank of England rate peak. The pound hit a six-month low of $1.2111 on Wednesday after falling 3.8% this month. It was on course for its biggest monthly fall against the dollar in a year or since former British Prime Minister Liz Truss’s economic agenda left British assets reeling. The pound was last up 0.5% against the US dollar at USD 1.2201, having fallen more than 2%. Over the previous six trading days, it was the biggest drop in that period since July. The nearest resistance can be seen at 1.2239, a break upward could trigger a rise to 1.2266. On the downside, immediate support is seen at 1.2119; a break below could take the pair towards 1.2067.

At the lows of the week, a new downward channel has formed. Now, the price is near the upper border of the channel and may continue to decline.

USD/JPY

The US dollar weakened slightly against the yen on Thursday. Investors are wary of potential intervention in the yen as it holds near an 11-month low against the US currency. The Japanese currency is also weakening sharply, but its easing is being tempered by fears that the authorities may intervene to support the currency. The 150 yen per US dollar zone is seen by markets as potentially stimulating the intervention by Japanese authorities that occurred last year. Finance Minister Shunichi Suzuki said on Thursday that Japan would not rule out any options if there is excessive volatility in currency movements, warning against speculative moves in the yen as the currency falls. Strong resistance can be seen at 149.79; a break higher could trigger a rise towards 150.09. On the downside, immediate support is visible at 149.04, a break below could take the pair towards 148.18.

At the highs of the week, a new ascending channel has formed. Now, the price is near the lower border of the channel and may continue to rise.