May 30 Thursday 11:50 GMT
LONDON – The euro tested 1.3005 as the dollar drifted lower against the major currencies as market participants cast doubts on the uncertainty and more specifically, the timing of U.S. Federal Reserve’s intention to slow down on its stimulus program.
In the past few days, the market had been dominated by expectations of the Fed to tighten their monetary policy amid the perception that the U.S. job market and economy may be strong enough to allow the Fed to reduce its quantitative easing program.
The euro initially rose to the high of 1.3005 from 1.2950 (+55 points) against the dollar in the European session. However, the gains were unsustainable as the rates fell back on a retracement move back to 1.2940 as the dollar rebounds on short covering as the New York session enters.
The ascent to 1.3000 was described by traders to be a cautious move considering the steep decline of the stock market yesterday with only a small rebound in Europe. Euro Stoxx is +0.69% to 2,805, DAX is +1.16% to 8,480. FTSE is +0.19% to 6,639. Nikkei on the other hand fell 5.15% to 13,589.
The euro had otherwise traded in a relatively quiet 55 point range with traders closing their positions toward the month-end. The market focus later will be the Preliminary 1st Quarter U.S. GDP where the median forecast is +2.5%.
The 14-day moving average rose to 1.2985 from 1.2960. The 30-day moving average rose from 1.2965 to 1.2980. Resistance at 1.3005, 1.3020, 1.3050/55. Support at 1.2950, 1.2934, 1.2915.