More USD Downside Due in Days Ahead?
- Market keeps an eye turned towards Q1 US GDP, FOMC meeting.
- USDCAD has yet to achieve downside double top target.
- See the April forex seasonality report.
While there's a quiet start to the week on the economic calendar, fundamental headlines should make waves over the next few days with the Q1'15 UK GDP report due on Tuesday. However, given the USDOLLAR Index's weak technical structure (having breached the daily 34-EMA and held below it for the first time since last July), traders may want to keep their attention turned to Wednesday's US data releases and events.
Weeks of disappointing US data should culminate with a discouraging Q1'15 US GDP report, indicating growth around +1.0% annualized, undercutting much of the optimism - and growth momentum behind the greenback - that proliferated at the beginning of the year. On a standalone basis, a weak report could prove to be a one-off event (the market is well-aware of how poor US economic data has been), but with the Federal Reserve's April policy meeting set to conclude later in the day, the soft growth story has the chance to be amplified.
Accordingly, if the fundamental backdrop for the US Dollar this week is going to be a soft one at best, then there may be some more downside ahead as the worst month of the year (per QE era seasonal studies) wraps up. While EURUSD continues to carve out space within its two-month long symmetrical triangle, GBPUSD has maintained a moderate uptrend from the lows seen on April 14. Elsewhere, USDCAD may be due for more downside, having yet to achieve its C$1.1867 downside double top target; it currently resides in a symmetrical triangle itself.
See the above video for technical considerations in EURUSD, GBPUSD, and USDCAD.
--- Written by Christopher Vecchio, Currency Strategist
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