Fed’s dovish comments at the beginning of the week worsened the market sentiment towards the US Dollar. On Thursday, increased unemployment claims added pressure to the greenback ahead of the most expected release of the week – March labor market data on Friday. We believe the US currency could get a short-term bullish impulse from the improved average hourly earnings reading, but the mid-term forecast remains bearish.
EUR/USD extends the upside, reaching 1.1300 on Thursday. A pullback could happen from these levels, but next week we target at least 1.1500 for the pair. Key support is seen at 1.1300.
GBP/USD reversed from the 1.4500 resistance, showing unwillingness to break above the potential “head-and-shoulders” neckline. Daily candlesticks on Wednesday and on Thursday are a great illustration of the growing bearish pressure. However, on Friday the pair could get a short-term lift from the UK Manufacturing PMI reading (forecast – upbeat).
Meanwhile, USD/JPY stepped down to 112.15. Break below 112.00 could open the way to 110.00 next week. AUD/USD has finally reached 0.7700 and remains strongly bullish. China’s manufacturing indices on Friday could serve a perfect trigger for a new rally.