By Lukman Otunuga Research Analyst, ForexTime
After being bruised and beaten by a dovish Federal Reserve on Wednesday evening, the Dollar used today’s trading session to nurse its wounds.
The Greenback appreciated against most G10 currencies on Thursday as Treasury yields edged higher. Buying sentiment towards the currency was slightly stimulated by the strong first-quarter U.S. GDP data that signalled a rapidly improving economy.
U.S. economic growth expanded at a 6.4% annualised rate in the first quarter of 2021 thanks to rising vaccinations, government aid, and strong consumer spending. The impressive GDP figure reconfirms that the U.S. economic recovery is gathering speed. It does not end here. The number of American’s filing new unemployment claims fell to 553,000 last week. This was the lowest level since the first wave of the pandemic a year ago and the third straight week of jobless claims below 600,000. Although the Federal Reserve remains ruled by monetary doves, the question is for how long? As economic data continues to improve, the labour force moves in the right direction and inflation accelerates, hawks may reawaken from slumber.
Free Reports:
Download Our Metatrader 4 Indicators – Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter
Get our Weekly Commitment of Traders Reports - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.
Back to the technicals…
The Dollar Index (DXY) has found minor support around the 90.50 level. Although this could offer bulls a chance to strike back, prices are still trading below the 100-day Simple Moving Average while the MACD remains below 0. If bulls are unable to exploit this opportunity to push prices back above 91.05, this could result in a decline back towards 90.50 and 90.00.
Alternatively, a solid break above 91.05 may open the doors towards 91.31 and 91.80, respectively.
Weekly chart remains bearish
Dollar bears remain in the driving seat on the weekly timeframe. Prices are trading below the 20-week and 50-week Simple Moving Average. Sustained weakness below 91.50 may trigger a decline towards 90.00 and 89.00, respectively.
Keep a close eye on monthly candle close
April’s monthly candle could produce a bearish engulfing pattern which may signal the continuation of the current monthly downtrend. Bears need a solid monthly close below 90.50 to drive prices lower with the first level of interest at 89.17.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.
Article by ForexTime
ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com
- US Fed tilts towards a rate cut despite the postponement. HKMA left the rate unchanged at 5.75% May 2, 2024
- Brent crude oil hits seven-week low May 2, 2024
- Target Thursdays: USDJPY, Copper & EURCAD May 2, 2024
- WTI oil declines on rising inventories and negotiations between Israel and Hamas. Rising unemployment in New Zealand may force RBNZ to start cutting rates earlier May 1, 2024
- Bitcoin stumbles below $60k ahead of Fed May 1, 2024
- Expert Says Now Looks Like a Good Time To Buy This Renewable Energy Stock Apr 30, 2024
- Optimism over corporate earnings is fueling stock indices. The Hong Kong index reached a 5-month high Apr 30, 2024
- FXTM’s Copper: Hits fresh two-year high! Apr 30, 2024
- European indices grow on the ECB’s “dovish” position. Quarterly reports of mega-companies support the broad market Apr 29, 2024
- Japanese yen shows volatility amid speculation of intervention Apr 29, 2024