As I had expected, the Dollar fell against Euro, Sterling and Aussie on better than expected GDP data yesterday. Although consumer spending which accounts about 70% of US economy remains weak , unemployment is expected to keep rising and Stocks headed lower after the report suggest a very weak and shaky recovery outlook, the recession seems to getting closer to it’s end or at least, it’s not getting worse.
In my opinion, at least in near future in the upcoming week, this might wane the demand for Dollar as safe heaven currency which could further weaken the Greenback. Despite this, we will not necessarily see big bearish momentum for the Dollar next week, with the market remaining range-bound – the pressure is clearly more to the downside than to the upside for the Dollar.
EURUSD had a significant bullish momentum yesterday, topped at 1.4278 and closed at 1.4255. On the daily chart below, we can see that the pair attempted to set up a bearish scenario by breaking below the lower border of the broadening formation and the trendline support (both visible on the chart) but the bearish scenario was rejected as the pair whipsawed to the upside.
I am expecting further bullish momentum re-testing key level 1.4336 next week to get us out of the range-bound area. Breaking above that area should trigger further bullish momentum towards 1.4719, while a failure to move above 1.4336 should diminish the bullish scenario.
Finally, the GBPUSD had a significant movement yesterday, with a breakout from the range area of 1.6000 â€“ 1.6660. The pair topped at 1.6732 and closed at 1.6709.
I am expecting further bullish scenarios next week – at least testing the 1.7100 area. However I would need a consistent move above 1.6660 to confirm the bullish scenario.
As you can see on daily chart below, notice that the pair also broke above 1.6660 on June 30, and topped at 1.6743 – but the bullish scenario failed at that time as the pair whipsawed to the downside and hit 1.5982. So we have to be very careful at this phase because any movement back below 1.6660 area should be seen as bullish failure and bring us back into a range-bound market.
Have a great weekend and see you guys next week