The US dollar continued to post losses yesterday as EURUSD and GBPUSD breached 1.1400 and 1.3000 levels respectively. The bearish sentiment in the market for the U.S. dollar was clearly evident by the rally that has maintained a strong momentum so far.
Yesterday, the final Q1 GDP report showed that the US economy advanced 1.4%. This was the third upward revision since the preliminary report. Despite the upbeat data, corporate profits declined. For the markets, the focus was all about central bank officials and the intention to tighten monetary policy.
Looking ahead, the economic data today will include UK’s final revised quarterly GDP while Canada’s monthly GDP numbers are coming out. The US PCE data is also due with core PCE expected to rise 0.1% on the month, slower than 0.2% previously. Weaker PCE alongside consumer spending and income could continue to add to the bearish sentiment for the US dollar.
EURUSD intraday analysis
EURUSD (1.1440): EUR/USD continued to surge higher with the current rally posting three consecutive days of gains. Price action has clearly breached the 1.1400 price level with support on the daily chart seen at 1.1200. On the 4-hour chart, the momentum remains strongly biased to the upside with 1.1450 likely to be the next target. Any reversals will need to show a strong confirmation alongside fundamentals that could validate the reversal in price. In the near term, buying dips in EURUSD remains the major theme. Immediate support at 1.1357 is seen followed by a dip to 1.1300. As long as EURUSD remains within this support zone, we could expect to see short-term gains continuing in the currency pair.
GBPUSD intraday analysis
GBPUSD (1.3021): GBPUSD has breached the 1.3000 level and is also strongly positioned to the upside. Support on the daily chart is seen at 1.2975 which could offer a near-term decline for prices. A daily close below 1.2975 could, however, signal a decline towards the next lower support level seen at 1.2800 – 1.2780. On the 4-hour chart, the GBPUSD price action shows a strong risk of correction with no support being tested between 1.2800 and the current levels of 1.3000. Therefore, long positions above 1.2976 should be cautious as this exposes the risk of a correction in prices.
USDJPY intraday analysis
USDJPY (111.88): USDJPY has managed to trade above 112.00 level, but price action closed with a doji yesterday. A bearish close today could potentially signal a correction to the downside. On the 4-hour chart, price action is seen testing the 111.72 level which marks the top of the bull flag pattern. Bounce off this level is required and a close above 112.44 for further continuation towards 113.36. Failure to break above the previous high could result in USDJPY staying range bound. In this case, the support at 111.72 remains critical as it could potentially break and confirm the downside in USDJPY.
