Dollar Firms NY Morning

The dollar is still lower on the day, but it has recouped more than half of its earlier losses against the euro and sterling.

Sterling has peaked just before the disappointing CBI retail sales report. After being turned back as it approached $1.4600, it is now testing support near $1.4450. A break of this could see another half cent decline today. The hourly uptrend and congestion area is seen near the $1.4400 area.

For its part the euro has pulled back from the $1.2340 area and is now approaching the $1.22 area. The disappointing US GDP report and the greater appetite for risk, as illustrated by the large equity gains have not done the euro any favors. The bottom end of the week long trading range comes in near $1.2150.

Given the short-term technical indicators, it would not be surprising to see the euro and sterling come off into the European close and then recover. The dollar-bloc currencies are still holding up well with 1.5-2.0% gains being recorded today. And the yen remains soft on the crosses. So the dollar gains seem more like European weakness than a generalized risk aversion.