This article is originally referred from FXGlobe Daily Analysis
The U.S. GDP release defined Friday’s session, the Dollar traded sharply lower after the release of the 1.2% print, which was a huge negative surprise, as analyst expected a reading of 2.6%. The bearish data caused a rally in the Euro the Yen, and to a lesser extent in commodity currencies, as investors now think that a FED rate hike is off the table for the near future. The Yen was the winner of the week among the majors following Mr. Kuroda’s hawkish statement on Thursday.
Oil rebounded towards the end of Friday’s session, but if the negative U.S. release is the start of a weaker period in the U.S., the crucial commodity will likely remain under pressure. Precious metals got sharply higher following the GDP number, as gold and silver both benefited from the decline of rate hike odds. The Aussie, the New Zealand Dollar, and the Canadian Dollar all got stronger in the afternoon, but the Kiwi is still in the strongest technical position among the three major commodity currencies.
GBP/USD (current price: 1.3240)
Cable reacted in a less bullish way to the negative U.S. release compared to other majors, despite a positive announcement regarding Lending Activity in the U.K. earlier on. The pair still trades in a bearish flag consolidation pattern following the Brexit-lows, and the 1.3550 resistance seems to be holding back the Pound since the referendum. Short-term support stands at 1.3100, while immediate resistance is found near the 1.3285 level, as the declining 200-day MA is way above the current rate at 1.43
Our assessment: Cable has been trading in a narrow range for two weeks now, as volatility declined following the wild post-Brexit period. A new powerful move is possible should the pair leave the current range in either direction.
USD/JPY (current price: 102.40)
The pair fell sharply for the second day in a row, as the GDP release added to the downward pressure that developed following the BOJ’s hawkish monetary statement. The Yen regained almost all of its recent losses, as the rumors of a new round of Quantitative Easing by the central bank proved to be false. The recent rally in risk assets also pushed the pair higher, and a correction in the stock markets might add to the bearish momentum this week.
Our assessment: USD/JPY got close to its previous swing low on Friday, and should the decline continue this week, the 100 level might be in danger, as the Dollar remains under pressure.
EUR/USD (current price: 1.1173)
The Euro surged higher on Friday following the week U.S. GDP print and the most traded pair is now back near the 1.185 resistance level that capped the movements of the common currency since the Brexit vote. The cross violated the short-term declining trend yet again, as it jumped past the 200-day MA in Wall Street trading, The Euro still faces strong resistance near 1.12 and at 1.1375, and this week’s Employment Report might reverse the current trend if the U.S. labor market still proves to be strong.
Our assessment: EUR/USD is still in a neutral long-term range, after respecting the 1.10 support and breaking back above the 200-day MA, signaling a new short-term advancing trend.
WTI Crude Oil (current price: $41.87
Oil has declined by more than $10 since hitting a high above $52 in June and the past 10 days were especially bearish for the crucial commodity, as the fundamental picture got bleaker again. WTI Crude hit the 200-day MA towards the end of last week, and the key indicator is currently aligned with a strong support zone near $41.25, as well as the lower boundary of the declining short-term trend. The technical picture suggests that a correction is possible in the coming days, with resistance looming near the $44 level.
Our assessment: Oil well for six days in a row before rebounding in late trading on Friday as the Dollar got smashed lower following the GDP release, the bearish fundamentals haven’t changed but further USD weakness might lift the commodity.
Manufacturing PMIs will be in focus today, as the industrial indicators will be released around the globe. The Eurozone readings will come out first during the morning session followed by the PMI, while the U.S. ISM Manufacturing PMI will be published in the afternoon. The evening session will be highlighted by the Australian Trade Balance and Building Approvals, while New Zealand Inflation Expectation will also be released in late trading.
Original Source: FXGlobe Daily Analysis