Talking Points:
- USDOLLAR Hit by Dismal 1Q GDP; All Eyes on FOMC
- EUR/USD Threatens Bearish Momentum; Higher High on Tap?
- GBP/CAD Eyes 1.8640 Resistance as Pair Carves Higher Low in April
The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) is under pressure ahead of the Federal Open Market Committee (FOMC) interest rate decision as the advance GDP report showed a marked slowdown in the first-quarter, and the reserve currency may track lower going into the following as it appears to have carved a lower high in April.
Indeed, the marked slowdown in the headline GDP reading may boost the Fed’s argument to retain its highly accommodative policy stance for an extended period of time, but the stickiness in the Core Personal Consumption Expenditure, the Fed’s preferred gauge for inflation, paired with the resilience in Personal Consumption may put increased pressure on central bank to normalize monetary policy sooner rather than later as the data undermines the risk for disinflation.
Nevertheless, there remains a limited risk of seeing a major shift in the Fed’s policy outlook as Chair Janet Yellen remains reluctant to move away from the zero-interest rate policy (ZIRP), and the dollar may continue to give back the advance from back in October (10,354) should the committee merely reiterate the policy statement from the March 19 meeting.
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Read More:
Price & Time: Too Much “Hope” in USD/JPY?
EURJPY Scalps Target Critical Support at 141
USDOLLAR Daily
Chart – Created Using FXCM Marketscope 2.0
Risks Fresh Yearly Lows as USDOLLAR Carves Lower High in April
Interim Resistance: 10,602 (38.2 retracement) to 10,615 (78.6 expansion)
Interim Support: 10,406 (1.618 expansion)
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— Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
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EUR/USD Risks Higher High on Dovish Fed- GBP/CAD Eyes Key Resistance
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