US session review: Euro rises vs. dollar as ECB policy on hold

Data released (actual, consensus, previous):                

11:00 GMT UK BoE Interest Rate Decision 0.5%    0.5%    0.5%        

11:00 GMT UK BoE Asset Purchase Facility  £375B    £375B    £375B        

11:45 GMT EMU ECB Interest Rate Decision (Jun 6)  0.5%    0.5%    0.5%        

12:30 GMT EMU ECB Monetary policy statement and press conference                  

12:30 GMT USA Initial Jobless Claims (Jun 1) 346K    345K    357K       

The euro rose against the U.S. dollar Thursday as the European Central Bank kept its benchmark rate unchanged and ECB President Mario Draghi offered no sign that officials were sold on a further easing of monetary policy in the near term.

Weekly U.S. jobless claims fell by 11,000 to a seasonally adjusted 346,000 for the week ended June 1, roughly in line with expectations.

EURO:

The ECB President Mario Draghi addressed the euro-zone economy at his monthly news conference. He said ECB staff cuts its forecast for 2013 to a 0.6% fall in gross domestic product versus a March forecast of a 0.5% contraction. The staff, however, lifted the 2014 forecast to 1.1% growth from 1%.

The projections came after the ECB left its key lending rate unchanged at a record low 0.5% and made no changes to the deposit rate.

Data released showed German manufacturing orders dropped 2.3% in April month-on-month, falling short of analyst expectations of a 0.9% decline.

EUR/USD climbed to the boundaries of $1.3280 on Thursday, quickly leaving behind the critical area of $1.3220/40 (May highs). Currently rate holds at $1.3270 and a breakout of $1.3319 (high Feb.25) would open the door to $1.3343 (61.8% of Feb-Apr slide). On the flip side, support levels line up at $1.3200 with a back under may widen the cirrection to $1.3108 (MA100d) ahead of $1.3075 (low Jun6) and then $1.3053 (low Jun.5).   

POUND:

The pound also rallied.

The Bank of England left interest rates at a record low of 0.5%, and kept its asset-buying plan at 375 billion pounds ($579 billion).

GBP/USD soared to a fresh 4-month high of $1.5650. GBP/USD maintains a bullish tone, and a daily close above $1.5600 will anticipate further advances. In the case of steady gains above the level, the GBP/USD could extend its recovery up to $1.5700 in the upcoming days, regardless US employment readings tomorrow. Initial support comes at $1.5580 (hourly lows) with the key support is near $1.5520.

YEN:

The yen rallied amid general dollar;s weakness.

USD/JPY  recouped 38.2% of days plunge to the lows near Y95.90. Currently, the USD/JPY is trading at Y97.23 (38.2% of the Y99.47/Y95.88). The 50% Fibo is up at Y97.72. Earlier the US dollar fell around 300 pips from Y99.30.

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