Forex News: US Dollar Under Heavy Selling Pressure. GDP Eyed for Signs of Strength
Forex News: The ECB kept the rates unchanged as it was widely anticipated but during the press conference, ECB President Draghi noted that economic risks remain balanced and this was perceived as bullish for the Euro, allowing the pair to climb.
Yesterday’s price action established 1.2400 as support and we saw a small retracement followed by a bounce higher. The next target is now 1.2570 but once price gets there (or even before that), we expect to see a bigger pullback, considering the long distance travelled by the pair to the upside and the extremely overbought position of the Relative Strength Index.
It’s a busy day for the US Dollar today as we prepare for two important releases: the Advance version of the Gross Domestic Product (the main gauge of overall economic performance) and the Durable Goods Orders (shows changes in the total value of orders for goods with a life expectancy of more than 3 years). Both are scheduled at 1:30 pm GMT and both can strengthen the greenback if higher numbers are posted; the GDP forecast is 3.0% and the Durable Goods Orders expected change is 0.9%.
The US Dollar remained under heavy selling pressure yesterday and the pair continued its advance after a brief period of stagnation.
Price action is clearly bullish but the pair is likely to pause at 1.4300 and to retrace lower. The Relative Strength Index and Stochastic are both in deep overbought territory and the pair has travelled a huge distance without a pullback. All these are reasons for a move lower but after it finds support, the upside will prevail.
The United Kingdom will also release GDP data today at 9:30 am GMT. This is the Preliminary version, which tends to have the highest impact; higher numbers than the forecast 0.4% strengthen the Pound. Later in the day, at 2:00 pm GMT, BOE Governor Carney will participate in a panel discussion named "Global Economic Outlook" at the WEF Meetings and this will probably have an impact on the Pound.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 8-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.