Dollar Bulls Back in Driving Seat, But For How Long?
With improving US economic data easing fears revolving around a possible slowdown in growth momentum, appetite for the Greenback has improved drastically in recent weeks. While the DXY is likely to push higher in the near term, the medium to longer term outlook remains in favour of bears. For as long as the Federal Reserve maintains a “patient” and “flexible” approach towards interest rates, Dollar bears still remain in the game. Much attention will be directed towards the US Q1 GDP data on Friday. Should the report disappoint market expectations, the Dollar Index may end up surrendering this week’s gains are possibly more.
Sterling depreciates in the background
Elsewhere, the British Pound has extended losses against a broadly stronger Dollar with prices trading marginally below 1.2950 as of writing.
A combination of Brexit related uncertainty and Dollar strength should ensure the GBPUSD remains depressed for the rest of the week. The breakdown and weekly close below 1.3000 signals further downside with the next key level of interest at 1.2870 and 1.2800, respectively. Bears remain in firm control under the phycological 1.3000 level.
EURGBP challenges 0.8680
The EURGBP continues to edge higher on the daily charts with prices trading towards the 0.8680 resistance level.
A breakout opportunity seems to be forming with a daily close above 0.8680 needed to signal further upside. We could see a scenario where previous resistance transforms into dynamic support that encourages a move higher towards 0.8725.
EURJPY bulls nowhere to be found
This has been a bearish trading week for the EURJPY thus far with bulls nowhere to be found. The downside suggests that prices are likely to test the 125.00 level and potentially lower in the medium term. For bulls to have a chance in reclaiming the driving seat, the EURJPY needs to push back above 126.00.
Let’s not forget about Gold
It is becoming evident that Gold bulls are losing the battle this week, given how prices are trading near a 4-month low.
An appreciating Dollar is a primary culprit behind Gold’s depreciation in recent days. The precious metal still has a chance to bounce back if US GDP data fails to meet market expectations. Looking at the technical side of the equation, the precious metal is bearish on the daily charts with the first checkpoint at $1265 and $1260, respectively.
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