The GBP/USD pair failed once again around 1.5 levels despite the release of a better-than-expected UK data on Thursday. Retail sales rose 0.7%, compared to the market's 0.4% forecast. The prior figure report was also revised higher to 0.1% from -0.3%. The pair rose to a high of 1.4992, but failed to sustain gains. I had mentioned in the previous day’s report that it is essential that the pair ends above the channel resistance at 1.4976, failure to do so could be bearish. Consequently, a strong US data triggered a wave of selling, that pushed the pair down to a low of 1.4805. The pair now trades at 1.4846
On the hourly charts, we see the pair finally broke below the hourly 200-MA at 1.4850 in the previous session, and continues to trade below the same today. Moreover, the hourly chart shows, the pair has breached triple top formation with the hourly 200-MA acting as a neckline. This opens door for a technical target of 1.47-1.4720. However, the immediate losses could be capped around 1.48, under which the sell-off could be intense. On the other hand, a weaker-than-expected US Q4 GDP could push the pair higher to 1.4890 (hourly 100-MA).
EUR/USD Forecast: Could dip to 38.2% Fib level
The EUR/USD pair rose to a high of 1.1050 before falling back below 1.09 levels on a better-than-expected US data and reversal in equity markets. No major Eurozone data was released, while nothing new came out of Draghi’s speech in Italian parliament. However, a dip in the US weekly jobless claims to six-week low and a better-than-expected services PMI pushed the EUR/USD pair back below 1.10 levels. Moreover, it marked a third failure to sustain above 1.10 this week, which also brought technical selling pressure, which pushed the pair to a low of 1.0855. Euro could catch a bid wave in the European session, although significant gains are ruled out since the markets are favoring the USD ahead of the final US Q4 GDP print.
On the charts, the pair, currently at 1.0883, trades below 1.0911 (23.6% Fib retracement of 1.0461-1.1049). The daily RSI has also been pushed below 50.00 levels, indicating further room for a decline in the pair. The pair is also struggling to rise above 5-MA on the 4-hour chart. The RSI is also bearish on the hourly and 4-hour time frame. Thus, we could see the pair drop to 1.0826 (38.2% Fib retracement of 1.0461-1.1051). On the other hand, a rise above 1.0911, could see the pair re-test 1.0960-1.0970.
USD/JPY Forecast: Awaits US GDP
The Japanese Yen turned out to be the biggest beneficiary of the safe haven flows ahead of the US session on Thursday. However, the gains in the Yen were quickly erased after an upbeat US weekly jobless claims data and services PMI data pushed the 10-year yield to 2.00%. The USD/JPY pair recovered from the low of 118.31 to 119.18. The pair also received support from fed’s Lockhart, who said the rates could be hiked in June, July or September. The pair now awaits final Q4 US GDP numbers, scheduled for released today along with revisions to the University of Michigan Consumer Sentiment Index.
The pair currently trades at 119.19; below the 100-MA located at 119.23. So far for the day, we see a Doji candle on the daily chart, which can be expected ahead of a critical US data release. A break above 119.19 (23.6% of 122.00-118.31), could see the pair re-test the 50-DMA located at 119.46. On the other hand, a failure to rise above 119.19, could push he pair back to 118.61. The pair is likely to remain stuck in the range of 119.46-118.61 levels ahead of the Q4 GDP report in the US.
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