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GBP/USD Remains Supported Ahead Of US GDP
March 28, 2018/

Key Highlights

The British Pound formed a short-term top at 1.4244 and declined against the US Dollar.
There is a crucial bullish trend line forming with support at 1.4020 on the 4-hours chart of GBP/USD.
The S&P/Case-Shiller Home Price Indices in Jan 2018 increased 6.4%, more than the forecast of +6.2% .
Today, the US GDP report for Q4 2017 will be released, which is forecasted to post a growth of 2.7% (Annualized).

GBP/USD Technical Analysis

This past week, there was a nice upside move in the British Pound above 1.4000 against the US Dollar. The GBP/USD pair recently traded as high as 1.4244 before starting a downside correction.

It seems like a short-term top in place since the pair tested the 50% Fib retracement level of the last wave from the 1.3889 low to 1.4244 high. However, there are many supports on the downside above the 1.4000 level.

The most important one is a crucial bullish trend line with support at 1.4020 on the 4-hours chart. The same trend line is close to the 61.8% Fib retracement level of the last wave from the 1.3889 low to 1.4244 high.

Therefore, if the pair corrects further lower, it is likely to find support near 1.4000-20 in the near term. On the upside, an initial resistance is at 1.4200. A push above the mentioned 1.4200 level may perhaps take the pair towards 1.4220 and 1.4240.

Recently, the US saw the release of the S&P/Case-Shiller Home Price Indices for Jan 2018 by the Standard & Poor’s. The market was looking for a rise of 6.2% in indices compared with the same month a year ago.

However, the actual result was positive since there was a rise of 6.4% in the S&P/Case-Shiller Home Price Indices.

Overall, the US Dollar is showing a few positive signs versus the Euro and the British Pound. Having said that, today’s Gross Domestic Product Q4 2017 release may change the market sentiment in the short term.

Economic Releases to Watch Today

US Gross Domestic Product Q4 2017 – Forecast 2.7% versus previous 2.5%.
US Personal Consumption Expenditures Prices for Q4 2017 (QoQ) – Forecast +2.7%, versus +2.7% previous.
US Core Personal Consumption Expenditures for Q4 2017 (QoQ) – Forecast +1.9%, versus +1.9% previous.

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Euro Sinks After Disappointing Surveys - 27 March 2018

The common currency Euro had earlier struck a fresh 5-week peak versus the US Dollar as concerns that a global trade war had been brewing now seem to be receding. That had pushed investors to flock back into higher yielding assets which provided the Euro with solid gains since Monday. The latest data from the Eurozone has put a damper on the Euro’s climb, however; the latest surveys released by the European Commission have shown that confidence in the Eurozone in several areas, namely, services, industrial, business and economic sentiment, all came in with an unexpectedly low reading.

As reported at 11:06 (BST) in London, the EUR/USD was trading lower at $1.2413, down 0.27%; the pair had earlier hit a peak of $1.2473, while the low for the session is at $1.24099. The EUR/JPY is trading at 131.15 Yen, down 0.07%; the pair has ranged from a session low of 131.1230 Yen to a peak of 131.8160 Yen. The EUR/GBP was trading at 0.87877 Pence, up 0.4207% and well off the session low of 0.8747 Pence.
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Trade War Tensions Ease, Boosting Markets - 27 March 2018

Global stock markets were broadly higher on Tuesday morning in Asia after the Wall Street Journal reported that the United States and China were “quietly” negotiating a potential trade deal that could cool the brewing trade war and sparked fear among global investors. On Monday, White House trade advisor Peter Navarro expressed optimism that China would work with the U.S. to resolve the open trade-related issues satisfactorily. Chinese Premier Li Kequiang also said that he prefers to “stick to negotiations” to resolve the trade differences, rather than resorting to a trade war.

Japan’s Nikkei 225 soared 2.22 percent as of 1:27 p.m. HK/SIN, and the Shanghai Composite was up 1.04 percent. The Hang Seng Index was 0.87 percent higher, and South Korea’s Kospi was up 0.48 percent. The Asian gains came after a day of gains on Wall Street which saw a complete reversal of Friday’s losses.

Oil prices were also higher on Tuesday, receiving support from renewed optimism about U.S.-China trade relations, as well as a confirmation from Saudi Arabia and Russia that they expect to extend their current production cut agreement. Iraq also expressed support for OPEC’s production cuts on Monday. U.S. WTI futures were trading at $65.88 per barrel, up 33 cents per barrel, while Brent crude futures were up 21 cents per barrel to $70.33 per barrel.
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