Forex - Dollar rallied after Fed hawkish comment and buoyant US stocks

Forex News and Events: The Dollar rallied on Thursday, rising to a three-month high against the Yen, on data showing the US economy grew in Q1 faster than previously estimated and as hawkish Federal Reserve comments boosted expectations for an interest rate increase this year. Dallas Fed’s Fisher said on Wednesday the Fed could increase benchmark rates "sooner rather than later" if inflation expectations worsen. The comments prompted a jump in short-dated US Treasury yields on Thursday. Data on Wednesday showing US durable goods orders fell by a smaller-than-expected 0.5% last month bolstered a view that the Fed may have left its aggressive campaign to ease monetary policy behind it for now after slashing target borrowing costs to 2%. Demand for the greenback accelerated after the government said the US economy grew at an upwardly revised 0.9% pace in Q1. Buoyant US stocks and a $4 a barrel drop in the price of Oil added to investor enthusiasm for the Dollar. Yesterday, EurUsd was 0.89% lower at 1.5517, weekly lowest. UsdJpy traded up 0.88% at 105.57 retreating from a three-month high of 105.87. UsdChf went up 1.21% at 1.0497. GbpUsd dropped 0.34% to 1.9748.

Today's Key Issues (time in GMT): 07:00 CHF Swiss National Bank’s Roth, Kohli speak in a conference in Geneva 07:30 SEK Q1 GDP 0.7% vs 0.8% (MoM) 07:30 SEK Q1 GDP 2.8% vs 2.8% (YoY) 08:30 EUR ECB’s Weber speaks in Frankfurt 09:00 EUR May Euro-zone CPI 3.5% vs 3.5% 09:00 EUR May Euro-zone Unemployment rate 7.1% vs 7.1% 09:30 CHF May KOF Indicator 1.09 vs 1.20 12:30 USD April Consumption, adjusted 0.2% vs 0.4% 12:30 USD April Core PCE price index 0.1% vs 0.2% (MoM) 12:30 USD April Personal income 0.2% vs 0.3% 12:30 CAD Q1 GDP 0.0% vs -0.2% 12:30 CAD Q1 GDP annualized 0.3% vs 0.8% 12:30 CAD April Producer prices 1.0% vs 1.7% (MoM) 12:30 CAD April Raw materials prices 3.3% vs 6.6% (MoM) 13:45 USD May Chicago PMI 48.5 vs 48.3 13:55 USD May University of Michigan conditions final 72 vs 77 13:55 USD May University of Michigan expectation final 52 vs 53.3 13:55 USD May University of Michigan sentiment final 59.5 vs 62.6

The Risk Today: EurUsd Market failed to overtop 1.5800 early this week. On downside, yesterday return below 1.5600 would open the way down to 1.5000 psychological key level before 1.4500 pivot point. Support holds 1.5485 Thursday low. Initial resistance holds 1.5819 Tuesday high. A return in previous 1.5600-1.5800 consolidation range would reopen the way up to 1.6000 Pivot point resistance ahead of key resistance 1.6200 market target. GbpUsd Cable broke up the upper Trendline resistance of one-month downtrend 2.0398 – 1.9364 last week. This move over 1.9720 may reopen the way up to 1.9800 and 2.0000 psychological level. On the downside, a reversal below 1.9600 might bring again focus on 1.9337 January low and 1.9105 (50% retracement of 1.7049 – 2.1162 advance). Strong support holds 1.9363 20th February and 14th May low. UsdJpy Market is back on 3-month resistance around 105. Any profit taking on 105 level might send the market back down to 100 – 104 consolidation trading range. Minor support holds 102.58 May 9th low. Renewed strength over 105 would put 110.10 strong resistance (Trendline) into focus and mid January double top ahead of 111.92 early January high. UsdChf Market hit 1.0625 two-month high on May 8th. After hitting 1.0224 low this week, it is back in 1.0400-1.0600 trading range. Initial resistance holds 1.0625 May 8th high. Early January double top 1.1191 marks strong resistance. Initial support holds 1.0216 last Friday low. A return below 1.0400 would open the way down to 1.0200 and maybe toward 0.9639 17th March low.

Resistance and Support: EURUSD GBPUSD USDJPY USDCHF 1.6200 T 2.0447 S 111.92 K 1.1191 K 1.6000 K 2.0100 P 110.10 T 1.0625 T 1.5819 M 1.9800 S 105.70 M 1.0582 M 1.5495 1.9755 105.35 1.0500 1.5485 M 1.9363 T 102.60 M 1.0302 M 1.5000 K 1.9337 S 100.00 P 1.0200 S 1.4500 P 1.9105 K 95.74 K 0.9637 K S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot