The U.S. dollar spiked up against its major counterparts in European deals on Tuesday, as signs of strengthening U.S. economy raised speculation the Federal Reserve is moving closer to hike interest rates.
Diverging monetary policy of the U.S., compared to that of central banks in Japan and the Eurozone also boosted the appeal of the dollar bulls.
While the Fed is on track to raise rates in 2015, the Bank of Japan and the European Central Bank expanded their monetary stimulus programs recently that would weaken their currencies.
Slew of upbeat data out of the U.S. increased the likelihood that the Federal Reserve will raise rates earlier rather than later in 2015.
Traders look forward to a batch of key U.S. data due this week, which includes retail sales and consumer sentiment, for further clues about the health of the economy.
The greenback advanced to 116.09 against the yen for the first time since October 2007. If the greenback-yen pair extends rise, 117.00 is seen as its next possible resistance level.
Consumer confidence in Japan decreased unexpectedly in October, data from the Cabinet Office showed.
The consumer confidence index fell to 38.9 in October from 39.9 in September. Economists had expected the index to rise to 40.5.
The greenback climbed to 4-day highs of 0.9700 against the franc and 1.2393 against the euro, compared to Monday’s closing values of 0.9679 and 1.2419, respectively. The next possible resistance levels for the greenback may be located around 0.98 against the franc and 1.23 against the euro.
The greenback that closed yesterday’s deals at 1.5841 against the Sterling hit a 4-day high of 1.5834. Next key resistance for the greenback is likely seen around the 1.575 zone.
U.K. retail sales were flat in October, defying expectations for a decline, a report from the British Retail Consortium showed.
Retail sales on a like-for-like basis were unchanged year-over-year in October, defying the 0.5 percent drop expected by economists.
The greenback appreciated to a 4-day high of 1.1401 against the Canadian dollar from yesterday’s closing value of 1.1379. Continuation of the greenback’s uptrend may see it challenging resistance around the 1.15 mark.
The material has been provided by InstaForex Company – www.instaforex.com