FxWirePro: Dollar could gain further Euro and Pound

Dollar seems to be in driving seat. After Pound’s attempt to break higher against Dollar over Bank of England’s (BOE) quarterly inflation report release and Mark Carney’s speech failed, it is more likely that Pound will go for deeper correction against Dollar.

Since reaching 1.38 area, earlier in the year, Pound gained around 800-900 pips against Dollar on short covering, improved risk sentiment and weaker Dollar. But with June 23rd referendum coming closer, Pound bulls are likely to become more nervous and bears are likely to go for a push and test supports around 1.425 and 1.4 area.

Similarly, Euro, after consolidating around 1.14 area against Dollar, its attempt to build a base failed yesterday, with price drifting lower. Euro is more likely to fall towards 1.13 against Dollar, first, then 1.125 area and mostly towards as low as 1.1.

Despite weakness in non-farm, after initial jolt and push to next year, market has basically returned to status quo, one hike this year. Wage growth was much better, compared to headline. Moreover, upcoming referendum in UK, has started pushing both Euro and Pound down.