Dollar Down as Chinese Data Improves Risk Sentiment, GBP/USD Near New Highs

US dollar traded lower on 23 June as risk appetite improved after stronger Chinese data reduced the safe haven demand for the greenback.

The broad dollar weakness has moved the British pound closer to new highs once again. But the US currency's move against others do not seem to trigger major technical signals.

HSBC/Markit preliminary index of factory activity for China was at 50.8 for June, versus consensus of 49.7 and a final 49.4 in May. Above 50, the index indicates expansion.

GBP/USD rose to as high as 1.7046, from Friday's close of 1.7013. It had touched a 5-year high of 1.7064 on Thursday.

USD/JPY dropped to 101.91 from 102.07 and USD/CHF fell to 0.8944 from 0.8950. EUR/USD edged higher to 1.3614 from Friday's close of 1.3600.

Technical Analysis

Above 1.7064, GBP/USD will target 1.7350, the 50% retracement of the November 2007 to January 2009 downtrend, ahead of the 61.8% level of 1.8265.

A breach of this will open levels like 1.8700, 1.9000 and 1.9480 ahead of the 2.0 mark, last touched in November 2007.

On the downside, the pair's first major support is at 1.6384, the 38.2% retracement, ahead of 1.5854 and 1.5233, the 23.6% level. A break of this will confirm a downtrend and the next targets will be 1.4813 and 1.4230 ahead of 1.3503, the January 2009 low.

EUR/USD has supports at 1.3478 and 1.3595 and resistances at 1.3992 ahead of 1.4244.

USD/CHF has resistances at 0.9155, a break of which can destabilise the downtrend since July last year. Supports are 0.8907 and 0.8799 ahead of 0.8703.

For USD/JPY, 102.80-103.0 is a resistance region ahead of 104.12, a break of which will take the pair back to the steep uptrend since 2012.

On the downside, a break of 97.62 will expose 92.68. A break below that will prove a reversal of the uptrend since 2012.