Trade Setups in USD-pairs Around Q1'15 GDP Revision
- EURUSD faces run up into key resistance zone near $1.1040.
- USDCAD support zone C$1.2350/80 might be tested.
- See the May forex seasonality report.
The US Dollar's impressive turnaround the past two weeks has been by and large built up on one hope: that the US economy's weak data spell for the first quarter was merely transitory in nature. Several reports for the April reporting period over the past few weeks have stoked the optimism, namely: the Consumer Price Index; Durable Goods Orders; Housing Starts; and Nonfarm Payrolls.
The release of the Q1'15 GDP report was met with much fanfare, but this go around could be different. On the heals of the Bureau of Economic Analysis saying it would restate GDP figures for the past few years in July, there are many suggesting that "methodology errors" led to sub-normal Q1 GDP readings in the past two years. Accordingly, how seriously the market will take this print will be a good test of the US Dollar's mettle.
By all accounts, the Q1'15 GDP first revision should see the reading cut into negative territory (-0.9% expected from +0.2%) amid a surge in the trade deficit. Such a print might spook traders in fresh long positions, feeding into a short-term corrective cycle for the rest of the day.
After such a strong run-up the past two weeks, it might even be technically 'healthy' for the US Dollar to ease off, allowing the relationship between price and time to moderate, and for indicators to digest their overextended readings. USDCAD and USDJPY both off clear levels of trend support that could be pointed to; while in USDCAD's case alone does trend support coincide with major horizontal support established from January through April.
See the above video for technical considerations in EURUSD, USDJPY, USDCAD, and the USDOLLAR Index.
--- Written by Christopher Vecchio, Currency Strategist
To contact Christopher Vecchio, e-mail firstname.lastname@example.org
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.