The Cable found a renewed buying interest above 1.5340 on Wednesday and then rose to 1.5416 after the release of much weaker-than-expected US GDP data. The pair then rallied to 1.5487 before falling back to 1.5420 levels after the Fed statement. The Fed statement was slightly less dovish than expected, in a sense that the Fed remains optimistic regarding future growth and job gains despite the slowdown in the first quarter. Moreover, the slowdown was termed as “transitory”, which lent support the US dollar. Still, the June rate hike is not as good as a fantasy. However, the September rate hike is still on the table and thus the markets could bid the USD higher today. The longest streak of gains in the GBP/USD pair since 2012 could come to an end today.
The pair currently trades at 1.5418 after having run into fresh bids closer to 1.5450. The RSI on the hourly and 4-hour chart has turned lower from the overbought zone. The upward technical bias remains intact, however, a correction to 1.5339 could be seen today. A daily close below the same could open doors for more weakness to 1.5224 and 1.5153. The upward bias could strengthen more in case the pair manages to see a daily close above its 200-DMA at 1.5490. Till then, fresh bids could be expected on the rise.
EUR/USD Analysis: USD could make a comeback
The Euro was a raging bull on Wednesday as it rallied to a 7-week high of 1.1188 after a lower-than-expected US GDP. However, profit taking ensured the gains remain capped at 1.1110 after the Fed statement. The FOMC statement was pretty much in line with the expectation, although I believe it provides just enough to buy the US dollar at current levels. The Fed acknowledged the low growth and inflation in the first quarter, however, said the slowdown was partly due to transitory factors. The Fed remains optimistic about the future growth and job gains. Moreover, the first quarter is usually the strongest in the Eurozone and weakest in the US. Thus, the USD is more likely to make a comeback from today. On macro front, the Eurozone CPI index and weekly US jobless claims are due for release. A slight improvement in the Eurozone CPI could support the EUR. However, another week of a below 300K print of weekly claims could push the EUR/USD lower.
The pair currently trades 1.1098, after being rejected at the 100-DMA located at 1.1120 earlier today. The daily close above 1.1050 has turned the short-term technical outlook bullish. However, fresh bids are seen only in case of a daily close above the 100-DMA. Given the overbought RSI on the intraday charts, a correction to 1.1050 could be seen today. A break below the same could open doors for 1.0966. A close below 1.0966 (76.4% Fib expansion of 1.0461-1.1050-1.0519) would indicate the near-term top is made and risks sending pair down to 1.09-1.092 area.
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