USDOLLAR in Breakout Territory amid ADP, GDP, FOMC
- EURUSD tests the waters below 1.3400.
- GBPUSD at increasingly important 1.6925 support.
- July forex seasonals in QE era still working against greenback, however.
This week we've already discussed the implications of falling US Treasury yields on the US Dollar. Instead, the US Dollar is starting to gather momentum in the short-term amid a flurry of key event risk the next few days.
See the DailyFX US Dollar Economic Calendar for today's key events, ADP, GDP, and FOMC.
Regardless of what happens today, it's always important to remember that prices guide trading, not the data releases or central bank statements. Whatever the interpretation of these events is - stronger growth, more hawkish Fed, etc. - will be reflected in the prices. Size up your risk ahead of time and stick to your trading plan; although volatility has been low, these events will almost certainly bring a wave of action to the market.
See the video above for a technical outlook on the USDOLLAR as it heads into a familiar resistance zone between 10495 and 10544. EURUSD is riding a sharp downtrend from the past two weeks but the most important takeaway from today is that EURUSD must remain below $1.3475, the former yearly lows set in February.
Lastly, after weeks of inactivity or otherwise tedious trade, USDJPY could be on the cusp of a breakout to the upside. Weak US yields have done little to pull down the market in the face of rising equity prices, but given USDJPY's historical relationship with yield differentials, a signal that higher interest rates are coming to the greenback might cause more than a ripple.
--- Written by Christopher Vecchio, Currency Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.