The U.S. dollar gained ground on July 6 after the ISM Services PMI met analyst estimates, pulling EUR/USD lower and pushing USD/JPY back above 162.00. GBP/USD held firmer despite a weak UK Construction PMI, while USD/CAD tracked a pullback in precious metals.
The U.S. Dollar Index rose as traders reacted to the ISM Services PMI, which slipped from 54.5 in May to 54.0 in June, in line with analyst estimates. Readings above 50 point to expansion, so the print kept the greenback bid across the major pairs. The index is now trying to settle above resistance at 101.15 – 101.30, with the next level in the 101.80 – 101.85 range.
Euro slips on soft retail sales
EUR/USD lost ground as traders weighed a disappointing Euro Area retail sales report. Sales rose just 0.2% month-over-month in May, short of the 0.3% analysts had forecast. German Factory Orders offered some offset, growing 1.9% on the month against a 1.2% forecast.
Technically, the pair is attempting to settle below support at 1.1420 – 1.1435. A break of the 1.1420 level would open the way toward the 50 MA at 1.1400, and then support at 1.1350 – 1.1365.
Pound and loonie diverge
GBP/USD moved higher even after a weaker UK Construction PMI, which edged up from 38.2 in May to 38.4 in June versus the 40 analysts expected. A settle above resistance at 1.3335 – 1.3350 would target 1.3450 – 1.3465.
USD/CAD firmed as precious metals pulled back, with gold falling toward $4150 and silver settling below $62.00. The pair is testing resistance at 1.4225 – 1.4240, with 1.4335 – 1.4350 above.
Yen stays under pressure
USD/JPY rebounded and climbed back above 162.00, even as Treasury yields moved lower. Traders bet the Bank of Japan would maintain its ultra-dovish policy given the weakness of the Japanese economy, while the Fed is expected to raise rates in September. That wide interest rate gap keeps material pressure on the yen. A settle above 162.50 would test recent highs near 163.80.
Source: FXEmpire
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