The US Dollar is traded on stronger level today against most major currencies, following reports that initial jobless claims fell from 303,000 to 284,000. Analysts were mostly pessimistic that the data will improve, so the numbers became a complete surprise that once again fuels talk about sooner Fed rate hike.

The US Dollar is traded on stronger level today against most major currencies, following reports that initial jobless claims fell from 303,000 to 284,000. Analysts were mostly pessimistic that the data will improve, so the numbers became a complete surprise that once again fuels talk about sooner Fed rate hike.

EURUSD was down to 1.345 and has not shown any sign to stop before going further downward. While USDJPY break through to more than 101.80 after staying around 101.4 in almost two days after disappointing Japan inflation report release and the subsequent publication of US jobless claims improvement. GBPUSD too, fell to 1.697, the lowest level in a month.

GBPUSDGBPUSD chart in H4 with EMA 20 (red), EMA 60 (blue), and EMA 200 (magenta)


The charts now mirrors how the difference between the three major countries fundamental outlook if it is drawn on board. As many analyst have predicted at the beginning of the year, the US has turned into the country with the brightest prospect. QE3 tapering so far has successfully done, the job market quietly improved, and the Fed chief promised rate hike as soon as the economy is considered well enough.

Meanwhile, the UK that was previously hoped to hike rates much sooner fell into debate on how harmful is getting out of low interest rate period for the country. Consequently, the GBP fell out of favor with investors. Add that with the absence of UK-based data till the next Friday, then GBPUSD is completely controlled by US economy reports.

Considering the chart above, it is very likely that the pair will stay below 1.7000. Note the crossover of EMA 20 with EMA 200 pointed by the second downward arrow in the picture. The next big move from Sterling probably will occur following the release of UK Manufacturing PMI in the 1st of August.

However, forex traders should also take attention toward US economic data. Although the Fed is quite sure that the economy is growing okay, but the data often deviate slightly from the path of consistent improvement. In the current circumstances when market players are speculating wildly, slight drop could mean a significant pullback.