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Dollar Enters Crucial Week On Strong Note

Published 09/01/2014, 03:10 AM
Updated 02/07/2024, 09:30 AM

The dollar again climbed to fresh 11-month highs against the euro, while it also managed to climb against the yen. Positive US economic data as well as an escalation of the conflict in Ukraine helped the dollar to climb. A key figure for the US dollar will be this Friday’s employment report for August, which is expected to show the labor market steadily continuing to recover.

USD/JPY rose to 104.15, as data out of Chinese manufacturers pointed to a slowdown in the world’s second largest economy – which is also a very important trading partner for Japan. The official National Bureau of Statistics PMI index slightly missed expectations by dropping to 51.1 from 51.7 previously, while analysts were expecting it to fall to 51.2. The unofficial HSBC manufacturing gauge also dropped to 50.2 from 50.3 the previous month. The Chinese data also had a negative effect on the Australian dollar

The euro dropped before survey data that is expected to confirm that an index of business activity for manufacturers in the Eurozone fell to its lowest in more than a year. The euro is under pressure ahead of Thursday’s ECB meeting, when Mario Draghi is expected to hint at the conditions when Quantitative Easing may start in the Eurozone. The euro dropped to 1.3119 against the dollar, its lowest since September of 2013.

The manufacturing PMI out of the UK is also expected later during the day. The United States is on Labor Day holiday today, which should lead to thin volumes and quiet trading during the US session.

EUR/JPY back in bearish channel.

EUR/JPY remains trapped within the bearish channel after a failed breakout attempt to test the key 138.00 yen level.

The market is below the falling Ichimoku cloud and the daily RSI has turned negative, highlighting the overall bearish bias.

Support is seen at 135.71, the August 8 low. The 23.6% Fibonacci retracement level of the 143.46 – 135.71 downleg will act as a challenge to the upside.


EUR/JPY Daily Chart

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