•The dollar recovered on Thursday after suffering some brief losses overnight with traders focusing on relatively confident comments from Fed Chair Jerome Powell on the economy’s outlook.
The greenback took a beating after a surprisingly sharp retreat in the ISM index of manufacturing to 52.8 and downgrades of the U.S. inflation outlook prompted investors to sell the U.S. currency and push Treasury yields lower.
The euro was back at $1.1198, after reaching as high as $1.1265 overnight, while the dollar steadied at 111.55 yen from a low of 111.03.
Sterling was broadly steady after hitting a two-week high on Wednesday on speculation that Brexit talks between the British government and the main opposition party were making some progress.
The pound was last at $1.3054, having been as high as $1.3101 overnight ahead of a Bank of England rate decision where the central bank is widely expected to hold fire but its comments might shift future rate expectations.
•EUR/USD Technical Analysis: Euro Rebound May Be Exhausted
Downside progress stalled after the Euro fell to a two-year low against the US Dollar, as expected. Prices recovered from support marked by the bottom of a would-be Falling Wedge chart pattern, moving to re-test bounds of the near-term downswing from the March 20 high.
The advance was halted in dramatic fashion at this barrier, with the pair extending out to touch the outer layer of resistance only to capitulate and fully backtrackintraday. Indeed, a look at the four-hour chart suggests counter-trend support has been broken, setting the stage for bearish resumption.
Immediate support appears to be in the 1.1175-82 area, with a break below that opening the door for a test of April’s swing bottom at 1.1109. Defusing immediate downside pressure seems to require a break past resistance established along swing highs from late March. That is now at 1.1254.
Critically, the wedge setup visible on the daily chart typically carries bullish implications. For these to be neutralized, a daily close through its floor seems called for. That seems to imply that a sustained breach of the 1.11 figure is needed to make the case for lasting downward follow-through.
•USD/JPY fades its uptick to post-FOMC highs near 111.70, as the renewed USD upside loses steam amid subdued Treasury yields. Although the spot maintains the upbeat tone, in the wake of a risk-on action in the Asian equities.
After the Fed's dust settled, equities trade in the red, while Treasury yields bounced from their intraday lows. However, the yen remains reluctant to give up to dollar's demand. The 4 hours chart for the pair shows that it's unable to firmly regain ground above a bearish 20 SMA, while technical indicators have bounced from their intraday lows, but hold within negative levels. The pair would need to clear the 111.70 resistance to be able to extend it gains, quite unlikely ahead of the US Nonfarm Payrolls report next Wednesday.
Support levels: 111.20 110.80 110.50
Resistance levels: 111.70 112.00 112.45
•Factory activity recovered last month in parts of Asia but still appeared to be on shaky ground as global demand remained subdued and China’s stimulus measures were yet to show their full pulling power.
That left the outlook for the region’s central banks skewed toward easing, with Malaysia and New Zealand prime suspects for potential rate cuts, and Australia — whose monetary policy setters also meet next week — facing growing calls to ease.
•Oil prices fell on Thursday, pulled down by record U.S. crude production that led to a surge in stockpiles.
Outside the United States, however, oil markets remained tense as exemptions to U.S. sanctions on Iran expired, a political crisis in Venezuela escalates, and as producer club OPEC keeps withholding supply.
Spot Brent crude oil futures were at $71.81 per barrel at 0655 GMT, 35 cents, or 0.5 percent, below their last close.
U.S. West Texas Intermediate (WTI) crude futures were down 27 cents, or 0.4 percent, at $63.33 per barrel.
•U.S. crude stockpiles last week rose to their highest since September 2017, jumping by 9.9 million barrels to 470.6 barrels, as production set a record high of 12.3 million barrels per day (bpd), while refining rates fell, the Energy Information Administration (EIA) said on Wednesday.
Reference: Reuters, CNBC , DailyFX, FX Street
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