Friday July 31, 2009 - 12:20:09 GMT
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Forex Hound - www.forexhound.com
Dollar Likely to Lose Ground After Better GDP Number
The U.S. Dollar is expected to open lower this morning as speculators brace for the U.S. Gross Domestic Product Report which is expected to show that the recession eased during the second quarter. Todayâ€™s report is expected to show a second quarter decline of 1.5% versus a drop of 5.5% in the first quarter.
The slowdown in the decline of the GDP will be a sign that the recession is easing and could prompt traders to sell the Dollar as appetite for risk assets is likely to rise. A strong rally today in the major foreign currency markets could spillover into next month and hurt the Dollar even further.
Although the EUR USD is trading better overnight, technical factors are still limiting gains. Earlier in the week the Euro put in a swing top at 1.4304. Currently this market is only completing a retracement of the weekâ€™s range at 1.4155 to 1.4190. In addition, this currency pair is in a position to post a weekly reversal top following a close under 1.4205.
The GBP USD has improved quite a bit since the sell-off earlier in the week. A better than expected gain in home prices has helped support this market along with increased demand for higher risk assets. Technically, a breakout over 1.6585 will turn the main trend up on the daily chart and could trigger an acceleration to the upside.
Higher equity and crude oil prices are helping to pressure the USD CAD. Currently this market is in a position to test the low for the week at 1.0748. A move through this price could accelerate a break to the downside if equity markets maintain their upward pace. Weaker crude oil and stocks may encourage short-covering and a close over 1.0865 will turn reverse the weekly chart to the upside.
Expectations of a better opening in the equity markets are helping to boost the USD JPY. A better than expected GDP number should help boost equity prices and pressure the Japanese Yen. Key support comes in at 95.31. The next upside target is 96.15.
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