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The dollar slumped against the euro, sterling and Australian dollar

Central Bank Rate Outlook Dominates FX

The dollar slumped against the euro, sterling and Australian dollar as the Fed is seen to have a rate cut or at least an unchanged rate this year while the ECB, BoE and RBA are expected to raise interest rates further. The euro broke 1.35 handle and rose to 1.3553 versus the dollar. The sterling accelerated its rally after breaking a technical resistance at 1.9820, and reached 1.9886.

The dollar was little changed by a run of mixed economic data from US today. A key inflation gauge, PPI, rose 1.0% in March, beating the estimate of 0.7%. Excluding food and energy prices, core PPI was unchanged at 0.4%, double the forecast of 0.2%. US trade deficit narrowed slightly from 59.12 billion to 58.44 billion in February, compared with a consensus of 60 billion. University of Michigan consumer sentiment unexpectedly dropped to 85.3 in April, down from 88.4 a month earlier.

EURUSD will face interim resistance at 1.3550, followed by 1.3580 and 1.36. Additional ceilings will emerge at 1.3620, backed by 1.3650. Support starts at 1.35, backed by 1.3480, 1.3450 and 1.3420. Subsequent floors are eyed at 1.34.

GBPUSD encounters interim resistance at 1.9885, backed by 1.98, and 1.9920. Subsequent ceilings will emerge at 1.9950, followed by 1.9980 and 2. On the downside, support begins at 1.9850, followed by 1.9820 and 1.98. Additional floors are eyed at 1.9750, backed by 1.9720 and 1.97.

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