And the market’s risk-on mode continues with the anti-risk U.S. dollar depreciating against other currencies. Consequently, we saw both euro and cable heading towards higher levels Thursday, slowly approaching overbought territory. While growth optimism is currently overshadowing the latest Fed minutes, we bear in mind that a Fed policy shift could happen sooner rather than later should the economic recovery continue at its current pace. And such a shift would buoy the dollar trade in the medium-term.
However, as long as we are risk-on we will keep tabs on higher targets in both currency pairs.
GBP/USD: Breaking significantly above 1.42, we see a next target at 1.4250. On the downside there is a current support at around 1.4120 and if the cable breaks below that level we may see a correction towards 1.4070.
EUR/USD: If the euro is able to overcome the 1.2250-hurdle and further 1.2270 we will shift our focus to a higher target at 1.2340. If the pair falls however back below 1.2150, it may extend the slide towards 1.2120 and 1.21.
DAX: Traders in the DAX were again able to book a good profit amid the index’s volatile swings. We now focus on a higher target at 15580 while a crucial support is seen at 15000.
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