FxWirePro: Forex Daily Update

The US dollar index gained strength after the FOMC meeting minutes. It hit a high of 104.96 and is currently trading around 104.85.

The Fed minutes showed that future policy action would depend on incoming data, evolving outlook, and balance of risks. The committee members said that “the recent increases in inflation had been relatively broad-based and therefore should not be overly discounted.”

According to the CME Fed watch tool, the probability of a no-rate cut in June decreased to 95.90% from 96.7% a week ago.

Major resistance- 105/106.50

Major support- 104/103

Economic data for the day

US Flash Manufacturing and Services PMI  (1:45 pm GMT)

US new home sales (2 pm GMT)

EURUSD-

EURUSD pared some of its gains after hawkish Fed commentary. It hit a low of 1.08174 yesterday and is currently trading around 1.08299.

The policy divergence between the Fed and the ECB puts pressure on the pair at higher levels.

Economic data for the day

German flash manufacturing and services PMI (7:30 am GMT)

Major resistance-1.0900,1.100

Major support- 1.0800,1.0720

Yen-

The pair declined slightly after the upbeat Japanese PMI data. The flash manufacturing PMI climbed to 50.50 in May compared to a forecast of 49.70. Any break above 157 confirms further bullishness.

Major Resistance- 157,158

Major support- 154.50,153.40

Canadian Dollar

The Canadian dollar lost momentum on weak crude oil prices. Any break above 1.3700 confirms further bullishness.

Resistance- 1.3700,1.3765

Major support- 1.3580,1.3535