The US Dollar consolidated overnight strong recovery gains as investors now look forward to the FOMC meeting minutes to reaffirm June Fed rate-hike expectations. The greenback bounced off multi-month lows despite of mixed US economic data, which continued fueling concerns that slowing economic growth might hold the Federal Reserve from adopting aggressive rate-tightening cycle. In the latest US data, the IHS Markit flash services PMI rose to a four-month high but got offset by manufacturing PMI, which fell to its lowest level in eight months, and new home sales data that fell short of expectations.
Today's US economic docket features the release of existing home sales data but investors' focus would remain glued to the release of May FOMC meeting minutes, which is likely to act as a key driver of the markets’ near-term momentum.
The pair has managed to bounce of Tuesday's lows near mid-1.2900s, touched in the aftermath of a suspected terrorist attack in the city of Manchester, and is now trading with minor gains for the first time in three trading sessions. There are now macroeconomic data due for release from the UK and hence, the USD price-dynamics would remain an exclusive driver of the pair's movement on Wednesday.
Technically, the pair seems to have turned neutral and might continue oscillate within a short-term ascending trend-channel formation. Currently trading around 1.2975 region, the key 1.30 psychological mark now seems to act as immediate resistance above which the pair could extend the up-move towards multi-month highs resistance near 1.3040-45 region. The ascending trend-channel resistance, currently near 1.3075 region, might continue to cap any further up-move ahead of the UK general election and impending Brexit negotiations.
Conversely, on a sustained weakness below 1.2950 level, the pair seems more likely to head towards testing the channel support, currently near the 1.2900 handle, which if broken should pave way for near-term corrective slide. Below the said handle, the pair is likely to accelerate the slide towards 1.2850-45 horizontal support before eventually breaking below the 1.2800 handle towards testing its next major support near 1.2770-65 region.
The pair seems to have lost its upside momentum, despite of Tuesday's stronger EZ PMI prints and impressive German Ifo data, and broke below a short-term ascending trend-line support, confirming a bearish 'rising wedge' chart pattern formation on 1-hourly chart. The pair subsequent dropped below the 1.1200 handle and is currently hovering just above 1.1165 immediate support, marking 23.6% Fibonacci retracement level of its recent up-move from 1.0839 to 1.1268 touched yesterday. Investors now look forward to a scheduled speech by the ECB President Mario Draghi for fresh clues over the central bank's near-term monetary policy outlook. Against the backdrop of recent positive momentum in the region's economic activity, slight hawkish comments could spark a fresh leg of bullish momentum for the shared currency.
From a technical perspective, break below a bearish formation now seems to point towards further corrective slide in the near-term. Hence a follow through weakness below 1.1165 immediate support has the potential to drag the pair towards 1.1130-25 en-route the 1.1100 handle and its next major support near 1.1070-65 area.
On the flip side, momentum back above the 1.1200 handle now seems to confront resistance near the pattern support break-point, now turned resistance, near 1.1230 level. Any further up-move beyond immediate resistance now seems to be capped at mid-1.1200s resistance area and only a decisive move above this strong hurdle would negate expectations for a near-term corrective slide.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD holds above 0.6500 in thin trading
The Australian Dollar managed to recover ground against its American rival after AUD/USD fell to 0.6484. The upbeat tone of Wall Street underpinned the Aussie despite broad US Dollar strength and tepid Australian data.
EUR/USD comfortable below 1.0800 lower lows at sight
The EUR/USD pair lost ground on Thursday and settled near a fresh March low of 1.0774. Strong US data and hawkish Fed speakers comments lead the way ahead of the release of the US PCE Price Index on Friday.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays near 4.2% after upbeat US data and makes it difficult for XAU/USD to gather further bullish momentum.
Google starts indexing Bitcoin addresses
Bitcoin address data is live on Google search results after users realized on Thursday that the tech giant started indexing Bitcoin blockchain data. However, mixed reactions have followed the tech giant's reversed stance on the cryptocurrency.
A Hollywood ending for fourth quarter GDP
The latest revisions put Q4 GDP at 3.4%, the second fastest quarterly growth rate in two years. Much of the upside was attributable to stronger consumer spending, yet fresh profits data affirmed it was a good quarter for the bottom line as well with profits up by the most since the Q2-2022.