Q2 GDP data fails to impress as US dollar extends declines
|On Friday, the second quarter gross domestic product data was released which showed that the US economy expanded at a pace of 2.6% in the three months ending June. This was slightly below consensus estimates of 2.7%. The greenback extended the declines falling to a fresh 14-month low as a result. The US dollar index was down 0.7% closing at 93.25 which marked the lowest close since May last year.
Looking ahead, the economic data today will focus on the flash inflation estimates for the eurozone. Economists are expecting inflation to remain steady, rising 1.3% on the headline and 1.1% on the core, same as the month before.
Later in the day, the US Chicago PMI and pending home sales report will be released. With today being the last trading day of the month, expect to see some profit booking and some volatility in the US dollar.
EURUSD intraday analysis
EURUSD (1.1732): The EURUSD rallied on Friday, but the range established was within Thursday's high and low. The inside bar that was formed as a result could potentially signal a breakout in the near term. The direction of the breakout will signal the near-term trend in prices. To the downside, the main support is established near 1.1635 which could be tested if price action breaks out from last Thursday's low of 1.1649. If the support at 1.1635 fails to hold the declines, then expect further declines in EURUSD towards the next main support at 1.1475.
GBPUSD intraday analysis
GBPUSD (1.3121): The British pound continued to consolidate above 1.3025. Friday's price action has result in an inside bar formation as well. Support at 1.3025 will be critical as a breakdown below this level could signal sharp declines to 1.2818. On the 4-hour chart, GBPUSD has formed an inside bar. An intraday close below 1.1312 could send GBPUSD lower on the day. The initial support is seen at 1.3025 followed by a decline to 1.2818.
USDJPY intraday analysis
USDJPY (110.55): USDJPY extended the declines on Friday, closing at fresh 2-month low. Price action was seen posting a fresh two month decline earlier today before pulling back. A close above 110.80 will signal a move to the upside on a daily basis. Resistance is seen at 111.77. Currently, the price action on the 4-hour chart suggests a potential falling wedge pattern in the making. A lower high is to be expected. However, if USDJPY can establish support at 110.81, then we could see a near-term push towards 111.77.
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