On Tuesday, the US Dollar (USD) was broadly under pressure against most major currencies and the weakness got further aggravated after the release of weaker-than-expected durable goods orders data. Orders for US durable goods in March rose 0.8% but orders for core durable goods, which exclude transportation items, declined 0.2%. Tuesday's weak economic data was yet another sign that US economic growth in the first-quarter might be tepid, strengthening the case that the Federal Reserve might refrain from raising interest rates. The Fed is scheduled to announce its monetary policy decision later today where it is widely expected to leave interest rates unchanged.
The overall USD weakness assisted the GBP/USD pair to break above 1.4600 mark for the first time since early February on easing fears of a 'Brexit'. The GBPUSD pair jumped to as high as 1.4638 before giving up some of its gains and drop back below 1.4600 mark. Meanwhile, the EUR/USD pair rose to as high as 1.1340 before pulling back below 1.1300 handle.
Today's move in the GBP/USD pair would be driven by the UK GDP data for the first quarter of 2016. Economists expect a slower pace of q/q GDP growth of 0.4% as compared to 0.6% q/q growth recorded in the last quarter of 2015. However, key event risk remains the outcome of a two-day FOMC meeting. Investors would keenly look for guidance for future interest-rate hikes during the year.
Technical Outlook
GBP/USD
On daily chart, the pair tested its immediate key resistance near 1.4640-50 area, representing 38.2% Fibonacci retracement level of 1.5930-1.3835 downslide. Also on H4 chart the 1.4640 resistance area coincides with a short-term ascending trend-channel resistance.
With H4 RSI already reading above 70 and ahead of the key event risks, the pair might witness some profit-taking move towards 1.4550 level. Additional weakness below 1.4550 level is likely to be limited by the ascending trend-channel support near 1.4480-75 area.
On the upside, move back above 1.4600 round figure mark might continue to face resistance at 38.2% Fibonacci retracement level near 1.4640 area. This is closely followed by a hurdle at Feb. 2016 high level near 1.4675-80 area, also coinciding with the trend-channel resistance.
EUR/USD
Although the pair managed to break-through 1.1300 handle, it continues to witness fresh offers at higher level. A subsequent selling pressure below .1285 immediate support seems to drag the pair back towards 1.1260 support ahead of a key support near 1.1220-15 area, marking 38.2% Fibonacci retracement level of 1.0830-1.1465 up-swing.
Alternatively, a sustained strength back above 23.6% Fibonacci retracement level immediate resistance near 1.1315 area should boost the pair immediately towards 1.1355-60 horizontal resistance. The momentum could assist the pair to revisit a very important resistance near 1.1400 round figure mark. A clear break-through 1.1400 mark handle might negate any bearish outlook and open room for further upward trajectory in the near-term.
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