US dollar outlook – EUR/USD, USD/JPY, GBP/USD
- of USD Despite better-than-expected US economic data, the economy stalled on Wednesday but could turn around in the coming days
- Market attention shifts to the US in the fourth quarter GDP report
- This article examines the technical outlook for the US dollar, focusing on three major currency pairs: euro/usd, USD/JPY and GBP/USD
Most read: The US dollar struggled despite better-than-expected US PMI data. Next GDP, PCE
The US dollar fell on Wednesday despite the better-than-expected PMI results, but the tide could turn in its favor in the coming days, especially if key US economic indicators continue to outperform expectations. With that in mind, it's important to keep an eye on the fourth-quarter gross domestic product numbers, which are scheduled to be released on Thursday.
Estimates predict that economic activity will expand at an annual rate of 2% in the fourth quarter, following a 4.9% increase in the third quarter. Although GDP is backward-looking, it can still provide valuable information about the health of the economy. Therefore, traders should monitor this report closely, paying particular attention to household spending, which is the main driver of growth.
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With consumer spending performing better than expected, thanks in part to a strong labor market and rising confidence levels, it wouldn't be surprising to see another strong GDP report. This scenario could further reduce the likelihood of the Fed cutting rates in March, prompt traders to dial back overly dovish expectations for FOMC policy direction, and create a more constructive backdrop for the USD. .
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EUR/USD technical analysis
After a subdued performance earlier in the week, EUR/USD rebounded on Wednesday, bouncing off the 200-day simple moving average and approaching the 1.0900 handle. If the rally accelerates in the coming days, technical resistance will appear at 1.0920/1.0935 and then at 1.0975. If we increase the strength further, the crosshair will be 1.1020.
On the other hand, if sentiment shifts back in favor of sellers and the pair turns lower, the 200-day SMA near 1.0840 will be the first line of defense against a bearish attack. Price may stabilize in this area before heading back, but a breakdown could see a move towards 1.0770 and then 1.0710 (trendline support).
EUR/USD technical chart
EUR/USD chart created using TradingView
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|
change |
long |
shorts |
OI |
| every day | -30% | 30% | -3% |
| weekly | -twenty four% | 17% | -Four% |
GBP/USD technical analysis
GBP/USD also rose on Wednesday, but failed to break through the resistance at 1.2770. Traders should closely monitor this technical ceiling for any bullish implications in the coming trading sessions. If that happens and the price finally rejects the downside, a possible pullback towards 1.2680 could be considered. Further losses after this point could shift the focus to 1.2600.
On the contrary, if the cable extends its advance and decisively crosses 1.2770, a bullish signal will appear before us, originating from the confirmation of the symmetrical triangle that has been developing since the middle of last month. In this scenario, GBP/USD could initially rise towards 1.2830 and then start the next leg of the uptrend towards 1.3000.
GBP/USD technical chart
GBP/USD chart created using TradingView
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Technical analysis of USD/JPY
USD/JPY sold off on Wednesday, but managed to break out of its worst levels and end the day above its 100-day simple moving average near 147.40. The price is likely to stabilize in this zone in the coming days before continuing its upward trend. However, if a breakdown occurs, a retracement towards the 146.00 handle cannot be ruled out.
On the other hand, if the bulls regain control and push USD/JPY higher, technical resistance could be found at 149.00. If it is even stronger, the psychological score of 150.00 will attract attention. A retest of the region is within the realm of possibility, but given the risk of Tokyo intervening in the foreign exchange market to support the yen, this level may not be sustainable for long.
