Apart from a loss-making cable, there was not much going on in the markets on Thursday. Dollar bulls remained active, sending the greenback higher against its major counter parts but trading the GBP/USD has proved unsuccessful. The pound sterling refrained from trading any lower than 1.2240 and tagged a fresh support at 1.2258. We will now wait for a sustained break below 1.2230, possibly pushing the pound for a test of 1.22. On the upside we expect a short-term resistance at 1.2330/50. The U.K. Services PMI report is scheduled for release at 9:30 UTC, but this report is not expected to have a major impact on the pound.
The EUR/USD traded slightly lower, dipping below 1.05. For the euro to fall towards lower targets the pair will need to break below 1.0485. As long as the euro remains firmly above 1.05 we could see some pullback towards 1.0540/50.
Market participants will listen to Fed speak from Janet Yellen who is expected to reaffirm the case for tightening at the next FOMC meeting in two weeks. Yellen gives an address on the economic outlook in Chicago today at 18:00 UTC.
The ISM Non-Manufacturing index is scheduled for release at 15:00 UTC and could also have a minor impact on the greenback.
We generally expect further dollar strength in the coming days, even though we may see some corrective movements in both major currency pairs.
Have a good weekend.
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