Dollar Slumped as US Applies New Import Duties on China
The dollar fell sharply across the board after US government said it will levy new duties on imports of coated paper from China. A Commerce Department official said this move reversed an old policy of not applying duties to subsidized goods from non-market economies. The euro tested 1.34 and the sterling broke 1.97 versus the dollar, while the yen bounced from 118 to 117.22 against the dollar.
This knee-jerk reaction seems somewhat overdone since it happened just before London market close and it is Friday when traders tried to get out of their long dollar positions. The dollar steadied later, with euro and sterling bouncing off session highs.
Earlier in Friday US session, the dollar gained only slightly after a run of US economic data came in better than expected. Core PCE rose 0.4% in February, showing core inflation risks remain high. Personal income and consumption both increased 0.6%, better than expectation. Chicago PMI surprisingly climbed from 47.9 to 61.7, far above the forecast of 49.2. Later, a weak number University of Michigan consumer sentiment fell from 91.3 to 88.3 in March, the lowest in six months.
EURUSD will face interim resistance at 1.3380, followed by 1.34 and 1.3420. Additional ceilings will emerge at 1.3450, backed by 1.35. Support starts at 1.3350, backed by 1.3320, 1.33 and 1.3280. Subsequent floors are eyed at 1.3250.
GBPUSD encounters interim resistance at 1.97, backed by 1.9720, and 1.9750. Subsequent ceilings will emerge at 1.9780, followed by 1.98 and 1.9850. On the downside, support begins at 1.9660, followed by 1.9630 and 1.96. Additional floors are eyed at 1.9570, backed by 1.9550 and 1.95.
USDJPY Bounced Off
As we said the yesterday, the USDJPY pair trades back and forth in the range between 116 from 118.50 against the dollar recently. In Friday trading, the dollar encountered resistance around 118.50 versus the yen, bounced off session high to 117.24, and then consolidated in the area between 117.50-80.USDJPY encounters interim resistance at 117.80, backed by 118 and 118.40. Subsequent ceilings will emerge at 118.60, followed by 119 and 119.50. On the downside, support begins at 117.50 and 117.30, followed by 117. Additional floors are eyed at 116.70, backed by 116.50 and 116.