29/04/2014: Trading outlook ahead of the US session

Forex trading has been quite choppy this morning, but it seems as though the US dollar is just beginning to gain the upper hand against the key majors. UK GDP growth came in just shy of estimates at 0.8% for the quarter (0.9% had been expected). This has boosted the dollar which has dragged Euro/Dollar slightly lower and resulted i a breakout of Dollar/Yen. Gold has also been dragged lower as well.

Investor sentiment for the European indices has also been positive today. Interestingly, once more on a positive session, the DAX is outperforming the FTSE 100, helped by strong earnings from Deutsche Bank, although both indices are performing better than the French CAC 40.

Having digested the slight miss on UK growth, traders will now be looking towards the German inflation data at 13:00BST, where a miss of the year-on-year CPI (forecast to be 1.4%) would put pressure on the Euro and give the dollar a further boost. The subsequent consumer confidence data for both Eurozone and US which are released at 15:00BST will also be watched today.

EUR/USD is up once again today, but again there has been a push higher that has been sold into intraday. Today’s peak at $1.3878 was just under yesterday’s $1.3879 which is a slight concern. Also momentum indicators remain anchored which continues to hold me back from being positive. However, the sequence of higher lows remains in place and dips are being used as a chance to buy. There is good intraday support around $1.3840.

GBP/USD looked to be pushing for another upside break, but the UK GDP data resulted in a 50 pip fall and dragged the rate back once more into mid-range territory. I expect this volatility to continue as the announcement continue to come over the next few days. Look for a confirmed break of the range sub $1.3760 or above $1.3856. A difficult call as things stand.

USD/JPY has broken the 102.72 key resistance as the dollar has strengthened today. Buying into corrections seems to be the outlook now the bulls are re-asserting themselves. There is good support around 102.45.

Gold has now formed the top pattern that I talked about in the morning report video as the reaction low support at $1287.29 has been breached. The Near term deterioration is being flanked by the falling 21 hour moving average around $1294. It would not nee a near term break above the resistance at $1296.

On the indices, the DAX is rather a messy daily chart (a function of the higher volatility and the changing investor sentiment over the past few days) now but the technical picture shows a decent base pattern over the past couple of days and a move to retest the resistance at 9645. The FTSE 100 looks far more orderly but less reactive to the positive sentiment today. Despite this though, now the index has pushed firmly above the early April reaction high at 6706. This has opened 6827.

Leave a Reply

Your email address will not be published. Required fields are marked *