Afternoon Forex Overview

The U.S. dollar declined versus the euro on Friday as the shared currency was supported by strong economic data and more confidence that Greece will recover.

The greenback pared losses after better-than expected retail-sales data and a surprise decline in consumer confidence.

The dollar index, which measures the U.S. unit against a trade-weighted basket of six major currencies, traded at 79.990, compared to 79.907 before the sentiment report but down from 80.542 in late North American trading on Thursday.

The euro rose to USD1.3738, paring an earlier gain though still above USD1.3680 late Thursday. The shared currency is headed for its highest weekly close in seven weeks.

The dollar traded at JPY90.86, up from JPY90.50 Thursday.

The U.S. Commerce Department said retail sales unexpectedly rose last month by 0.3%. Excluding autos, sales jumped 0.8%.

In recent action, the British pound rose 0.5% versus the dollar while the Australian dollar was higher earlier but lately traded little changed against the U.S. currency.

Also vying for attention, the Reuters/University of Michigan index on consumer sentiment declined to 72.5 in March from 73.6 in February, according to reports.

Market expectation

Analysts said the data should prompt more optimism from the Federal Reserve when officials meet next week. Any indication that policy makers may be closer to raising interest rates should support the U.S. currency.

Still, the dollar remains vulnerable to sales from investors who had bought it in a flight to safety. More willingness to buy riskier assets, including stocks and high-yielding currencies, will weigh on the dollar.

EURUSD has seen modest recovery to USD1.3760 area ahead of and around the London fixing event though flows are said muted and not overly impressive. European traders heading for the exits and likely don't want to be short the pair after the recent rebound but expected to keep stops tight. Offers in place atop the morning high, said to extend to USD1.3805. Bids back at USD1.3720 with stops below.

Pound trades to near USD1.5180 as the London fixing unfolds. Stops reported building above the offers here and above USD1.5200 where supply was noted earlier.

EURJPY moves sharply lower after touching JPY125.20, the pullback has been sharp moving from the high to JPY124.72 in a matter of minutes. After a brief respite euro-yen has continued lower down to JPY126.62. The JPY125.20 level was the previous high in euro-yen on 22 Feb and traders note it is strong resistance.

Dukascopy Swiss FX Group

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