- US dollar extended weakness overnight after weaker than expected US CPI data accelerated profit taking.
- The US core Consumer Price Index year-on-year for April came below expectations at 2.1% versus 2.2% forecast by analysts.
- Softer US inflation figures suggest that the Fed can wait after an imminent rate hike in June.
- The major struggles to hold gains above 110 handle, slips below 5-DMA support.
- Price action capped at 50% Fibos. Technical studies support further upside in the pair. Scope for test of 61.8% Fib at 110.87 on bullish momentum.
- That said, bearish divergence and 'Cypher Pattern' on daily charts keeps scope for downside.
- 20-DMA is strong support at 108.78 levels. Break below to see further weakness.
Support levels - 109.35 (5-DMA), 109, 108.78 (20-DMA)
Resistance levels - 109.68 (50% Fib), 110, 110.87 (61.8% Fib), 111
FxWirePro Currency Strength Index: FxWirePro's Hourly USD Spot Index was at 2.20893 (Neutral), while Hourly JPY Spot Index was at -156.988 (Bearish) at 0400 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.
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