Currency Pair Overview: Better GDP Numbers Bring Dollar Weakness

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Overall, the currency market saw strong momentum even from the London open, at a time when the S&P futures and crude oil traded flat. Despite this, the majors started to post strong gains against the dollar, fueled by the better than expected numbers coming out of the Euro-area. Moreover, the euro, the pound and the aussie managed to break-free from the range seen during the prior day of trading, a positive indication for market strength. In coming sessions, the market is likely to retain the same direction of trading, but only if the U.S. retail sales do not disappoint. 

The euro (Eur/Usd) showed some strength during Asian trade, but topped near the 1.4225 area, the same place where it peaked in the prior day of trading. From there the euro easily broke the resistance level after the better than expected GDP numbers, but then ran into the 1.4280 area, where it spent the rest of the European session. Ahead, the euro’s outlook lies to the upside.

The pound (Gbp/Usd) advanced more than 100 pips since Thursday’s session begun, and more importantly, it managed to break above the 1.6550 resistance area. This comes after the prior day, when the pound formed a doji-star pattern between the 20 and the 50-day moving averages, which pointed out market indecision. 

The aussie (Aud/Usd) moved only higher during the overnight session, as it appears to have one of the best outlooks among the currency market. Longer term, the pair could be driven higher by the huge interest rate differential, while near-term, it is being driven by the gains in the commodity market. This looks like a win-win situation for the pair.

The cad (Usd/Cad) showed a lot of eagerness to move lower during the Asian and the European markets, but until now, the cad declined only 60 pips as its trading volume was relatively small. Most likely, the cad will gather additional momentum during the U.S. open, its reliable trading time. Until then, the cad has to break below the 1.0850 area, where it bottomed during the prior day of trading.

The swissy (Usd/Chf) almost came to a standstill during the Asian session, but picked up some additional momentum during European trade. However, compared with the prior weeks of trading, it still looked very weak. This happens as the swissy is trading above the 20-day moving average and above the 1.0750 area, both of which are important price point areas.

The yen (Usd/Jpy) moved lower during the Asian session, but reversed during the European trading hours. For now, the yen is trading near the 96.20 area, which has acted as an important swing point throughout the prior U.S. sessions. On Wednesday, the yen formed a doji-star, which usually denotes a mixed outlook.

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