Confidence over the health of the US economy was elevated following reports of economic growth accelerating at its fastest pace in almost four years.
Second quarter growth expanded at an annualized rate of 4.1%, almost double the 2.2% achieved during the first quarter thanks to robust consumer spending and business investments. It is interesting how the Dollar has depreciated despite the highly encouraging economic growth figures. This could be a classical buy the rumour, sell the fact scenario with investors strategically positioning ahead of the US jobs report next week. With market expectations likely to intensify over higher US interest rates following the solid growth achieved in Q2, the Dollar’s downside losses may be limited.
In regards to the technical picture, it seems the Dollar Index may be unable to secure a weekly close above the stubborn 95.00 resistance level. An intraday breakdown below 94.70 could encourage a decline towards 94.59. Alternatively, if bulls can find their footing and are able to push prices back above 94.80, a move towards 94.91 could be a possibility.