Focus Back On The Greenback Ahead Of US Q1 GDP Data

Fundamental analysis of Forex market

The Japanese yen weakened against the USD after the country released key data. In March, the unemployment rate rose to 2.5% from 2.3% in February. Investors were expecting it to rise to 2.4%. In the month, the industrial production declined by minus 0.9% from the previous gain of 0.7%. On a positive note, the retail sales rose by 1% while the Tokyo CPI rose by an annualized rate of 1.4%. The core CPI rose by 1.3%. These numbers came a day after the Bank of Japan (BOJ) gave forward guidance on when it expects to raise interest rates.

Today, the focus will be on the greenback as the US releases its first reading of the Q1 GDP numbers. Investors expect that the economy grew by 2% in the quarter. This will be lower than the fourth quarter’s GDP growth of 2.2%. However, such a reading will be good considering that in the quarter, there was the longest government shutdown in history. Investors will also receive core PCE data, which is expected to have risen by 1.3%. This data will come as the US dollar strength continues. The dollar index is currently at the highest level in more than one year.

The Australian dollar rose slightly against the USD. This is after the country released the Producer Purchasing Index (PPI) for the first quarter. In the quarter, the PPI rose by an annualized rate of 1.9%, which was lower than the expected 2.0%. On a QoQ basis, the PPI rose by 0.4%, which was unchanged from the previous quarter. The PPI number measures the change in price of goods sold by manufacturers and is an important measure of inflation. Early this week, the country’s CPI data was much lower than expected.

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The EUR/USD pair was relatively unmoved ahead of the key GDP number from the US. It is now trading at 1.1135, which is slightly higher than yesterday’s low of 1.1117. On the hourly chart, the pair’s price is below the 50-day and 25-day moving averages. The RSI has moved up slightly to the current level of 43, while the volumes have declined. The pair will likely remain along these levels ahead of the GDP numbers. This is because there will be no major data from Europe before then.


The USD/JPY pair moved up to a high of 111.78 after the Japanese data, it then pared some of those gains and is currently trading at 111.64. On the 30-minute chart, the pair’s price is along the middle line of the Bollinger Bands. The signal line of the MACD has been rising and is close to crossing the neutral line while the volumes have declined. Like with the EUR/USD, the pair will likely remain along these levels as traders wait for the US GDP data.


After reaching a high of 1.0733 this week, the AUDNZD pair has been declining. Today, the pair reached an intraday low of 1.0560, which was the lowest level since Wednesday this week. On the four-hour chart, the pair is trading below the 25-day and 50-day moving averages, while the RSI is at the oversold level of 21. The price is also along the 61.8% Fibonacci Retracement level. There is a likelihood that the pair will continue moving upwards to test the 50% Fibonacci level of 1.0500.

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