The dollar index on the upside ahead of US GDP
InvestingOnline.com
27/07/2018, 02:05The Dollar index recovered on Thursday after falling for two days from July 24 high at 94.85. The pair bounced hard at 94.05, and it closed above significant levels. Investors are in wait-and-see mode before the US GDP release.
DXY daily chart July 26
Rumors say that the annualized GDP would come as high as 5% for the second quarter. However, market expectations are for a substantial rise of 4.1%, the double of the 2.0% increase in the previous quarter.
Core Personal consumption expenditures are expected to rose at the 2.2% pace in the second quarter, a slight slowdown from 2.3% registered in the Q1.
Prices or the personal consumption expenditures for the Q2 are anticipated at 2.0%, below 2.5% registered in the previous period.
FXStreet analyst Valeria Bednarik comments that “there were some rumors making the rounds that the reading could be closer to 5.0%, and current dollar’s strength may be partially due to market players already pricing in a solid outcome, which means that a softer figure can see the dollar giving up ahead of the weekly close.”
To the upside, a stronger than expected GDP would propel the Greenback to the 95.50 area and beyond. Selling areas are identified at 96.50 and 97.80.
To the downside, 94.11 is the immediate support. Below there, check 93.70, 93.20, and the significant 200-day moving average at 92.30 as buying areas.
As per context, the EUR/USD is trading at 1-week low ahead of the GDP. Technical conditions for are turning to the downside again with moving averages pointing to the south. MACD and the RSI are going down.
The EUR/USD fell from intra-day highs around 1.1750 to break below the 20 and 50 days moving average and to find support at 1.1640. The pair closed the day at lows, so the scoop for the EUR/USD is for more declines.
Previously on the day, the European Central Bank decided to keep its interest rate unchanged at 0% and the deposit rate at -0.4% according to a press release published by the bank. Later on the day, ECB president Mario Draghi hinted that ECB’s rates would remain on hold at least until September 2019.
