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The single currency popped from a 15-month month at $1.1522 on concerns from ECB Governing Council member Villeroy de Galhau over the failure of meeting the 2023 inflation target, supporting the existing accommodative monetary policy. Euro last traded at $1.1550.
Sterling meandered around $1.3616 as UK jobs data showed British employers expanded their payrolls to a record high in September, while the unemployment rate edged down to 4.5% in the three months to August.
Japanese yen nosedived a 3-year low at 113.78 against the safe-haven dollar after three Fed policymakers, including Vice Chair Richard Clarida, said overnight that the U.S. economy has healed enough to begin to scale back the central bank's asset-purchase programme.
The Canadian dollar on Tuesday strengthened to its highest level in more than two months against its U.S. counterpart at 1.2433, supported by elevated oil prices.
The risk-sensitive Aussie dollar slipped to $0.7337, retreating from Tuesday's one-month high at $0.7384, over fears of a spillover from China Evergrand's debt crisis continued weighing on investors' sentiment.
South African rand darted higher to 14.94 per dollar following local data showed August manufacturing output rose 1.8% year on year while mining production grew 2.0% in annual terms the same month.
The dollar-rupee staggered at 43.05(selling) on the domestic market.
10:00 - GBP - GDP (MoM)
10:00 - GBP - GDP (YoY)
10:00 - GBP - Monthly GDP 3M/3M Change
16:30 - USD - Core CPI (MoM)(Sep)
22:00 - USD - FOMC Meeting Minutes
The dollar Index extends its intense rebound near the 94.00 threshold, clinching a new high for this year 2021 amid an earlier rate hike expectation and announcement of a nearing tapering asset purchase which clearly impacted the yield curves.
A tightening of monetary policy by the European Central Bank remains far in the future but ECB remains vigilant on its inflation figures yet to be released this Friday. This could give additional upward momentum on the USD in the near term and exerts additional selling pressure on the euro and the pound.
On the technical side, after a breach and close above the 100% retracement A-B-C (93.72 level) ,the greenback could easily approach the 113% level at 94.38 followed by 127% level – 94.98 level in the near term. Resistance at 96.47 (161.8%) remains key level to watch
1.3750 marked the completion of ‘wave e’ of the triangular retracement (wave B) of corrective move A-B-C for GBPUSD and abruptly, we saw fresh sellers entering the market below the 1.3600 levels yesterday.
As per Elliott wave principle, GBPUSD is battling around 1.3515 levels and higher inflation, Brexit and Petroleum concerns could exert further pressure on the pound towards 1.32 levels towards completion of wave C.
A breach and close above 1.3750 nullify this downward pattern.