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The greenback fell across the board as US housing concerns remains a big problem and it may spread into the broader economy. The euro touched the 1.3850 resistance level versus the dollar before easing back to around 1.3820. The sterling climbed to a fresh 26-year high at 2.0652 against the dollar and then retraced back to 2.0610.

The dollar index fell to a 15-year low of 80.016, near the psychological support at 80. A break of this level may trigger another round of sharp dollar sell-off.

Several manufacturing reports from the Eurozone were mixed and did little to the market. The market will focus on US June existing home sales due 10AM EST tomorrow for more clues on the nation’s housing market conditions. The report is expected to show a -1.8% decline to an annual rate of 5.87 million units, which may weigh on the dollar.

GBPUSD encounters interim resistance at 2.0630, backed by 2.0650 and 2.0680. Subsequent ceilings will emerge at 2.0700, followed by 2.0720 and 2.0750. On the downside, support begins at 2.0580, followed by 2.0550 and 2.0530. Additional floors are eyed at 2.0500, backed by 2.0470 and 2.0450.

EURUSD will face interim resistance at 1.3850, followed by 1.3870 and 1.39. Additional ceilings will emerge at 1.3920, backed by 1.3950. Support starts at 1.38, backed by 1.3780, 1.3750 and 1.3730. Subsequent floors are eyed at 1.37.

Yen Rose vs Dollar

The yen strengthened sharply versus high-yielding currencies due to profit taking in carry trades as US stock market declined today. The dollar fell from above 121 against the dollar to test key level at 120. However, carry trades are still attractive given the fact that Japan is not seen lifting rates from current low level anytime soon while other industrial countries are on the way of raising rates higher further.

USDJPY encounters interim resistance at 120.30, backed by 120.50 and 120.80. Subsequent ceilings will emerge at 121, followed by 121.30 and 121.60. On the downside, support begins at 120 and 119.80, followed by 119.50. Additional floors are eyed at 119.20, backed by 119 and 118.50.

Source: MG Financial Group

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