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US Dollar Nears Short-Term Target; Outlook Remains Bullish

US Dollar Nears Short-Term Target; Outlook Remains Bullish

Nick Cawley, Strategist

USD Talking Points

- US Q1 GDP may surprise to the upside.

- ECB President Draghi watches as the Euro falls away.

Check out our new Trading Guides: they’re free and have been updated for the first quarter of 2018.

IG Client Sentiment data show retail is 52.5% net-long of EURUSD with long positions picking up sharply over the last week. Download the data for free and see what the changes mean.

US Dollar Index Continues its Rally

The US dollar index (DXY) continues its recent upswing and now nears its first short-term technical target at 91.41 on the back of higher US bond yields and a weak EUR. A break above this level and the 200-day moving average at 91.44 would leave 92.20 as the next upside target. Further gains may be seen later today when US Q1 GDP is released at 12:30 GMT. Market expectations are for the US economy to have expanded by 2% in the first quarter, compared to 2.8% in Q4 2017, although an upside beat cannot be ruled out.

DailyFX senior strategist Chris Vecchio will be covering US Q1 GDP live from 12:15 GMT.

US Treasury yields also remain elevated with the UST 2-year offered at 2.49% and the benchmark 10-year offered at 2.985%.

US Dollar Index (DXY) Daily Price Chart (September 16, 2017 – April 27, 2018)

US Dollar Nears Short-Term Target; Outlook Remains Bullish

EURUSD Ongoing Weakness

The UD dollar basket is also being boosted by a weak EUR which is currently trading at a three-and-a-half-month low against the US dollar at 1.2060. Having filled the gap between 1.2155 and 1.2090, the pair continues to push lower with the 200-day moving average at 1.2050 ahead of a further fall to 1.19155. The Euros fall was accelerated Thursday after the latest ECB policy meeting left all rates unchanged. The move gathered strength during the subsequent press conference with ECB President Mario Draghi giving the single currency little support. The EUR will now have to wait until the next policy meeting in June with market participants hoping Draghi will give some clues towards a timetable for ending the bond buying program.

EURUSD Daily Price Chart (September 7, 2017 – April 27, 2018)

US Dollar Nears Short-Term Target; Outlook Remains Bullish

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If you have questions or comments on this article, you can leave them in the section below, or you can contact the author via email at Nicholas.cawley@ig.com or via Twitter @nickcawley1.

--- Written by Nick Cawley, Analyst

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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