- US Dollar drops further across the board, still holds to weekly gains.
- US: Positive headline for Q1 GDP but details disappoint, Consumer Confidence revised higher.
The EUR/USD pair rose further during the American session on the back of a decline of the US dollar across the board and printed a fresh daily high at 1.1173. As of writing trades at 1.1150/55, up 25 pips for the day, the best day in two weeks.
The greenback peaked immediately after the US Q1 GDP report when EUR/USD bottomed at 1.1104, the lowest level since mid-2017. But quickly bounced to the upside as analysts digest details from the GDP report. The 3.2% print, above expectations does not materially change the outlook for the Federal Reserve policy, at least in the near term warned Wells Fargo analysts. “First, the underlying details were not as strong as the headline rate of GDP growth suggests. Second, the core PCE deflator rose at an annualized rate of just 1.3% in the first quarter. Consequently, this measure of consumer prices was up just 1.7% on a year-over-year basis in the first quarter.“
On another report, the University of Michigan Consumer Confidence Index came in at 97.2 in its final reading in April, up from 96.9 of the preliminary reading and above market consensus of 97.
The move higher in EUR/USD has been driven exclusively by a weaker US Dollar. The DXY today is falling 0.16%, posting the first slide after rising during three consecutive days to the highest in months.
Technical outlook
The recovery of the Euro lost strength around 1.1170 and it continues to hold near multi-month lows. “The EUR/USD pair bounced from its multi-month low of 1.1110 and is poised to finish the week in the 1.1150 price zone, below its previous relevant lows in the 1.1170/80 region, a sign of more slides likely ahead”, said Valeria Bednarik, Chief Analyst at FXStreet.
According to her, the weekly chart shows the pair has further extended its decline below moving averages, with the 20 SMA crossing below the 200 SMA some 200 pips above the current level. “Technical indicators remain within familiar levels, although the RSI anticipates another leg south as it gains downward strength at around 38.”
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