HomeContributorsFundamental AnalysisEURUSD Hits Vital Resistance Ahead Of Eurzone GDP Data

EURUSD Hits Vital Resistance Ahead Of Eurzone GDP Data

The Japanese yen retreated against the US dollar after strong economic data from the country. According to the statistics agency, the economy contracted by 1.0% in the first quarter after expanding by 2.8% in the fourth quarter as the government implemented a state of emergency. This slowdown led to a 3.9% year-on-year contraction, which was better than the median estimate of 4.8%. Capital expenditure fell by 1.2% while external demand declined by 0.2%. Private consumption, the biggest part of the economy, contracted by 1.5%. Further data showed that overtime pay increased by 6.40% while average cash earnings rose by 1.6%.

The British pound was relatively unchanged after the retail sales data from the UK. According to the British Retail Consortium (BRC), the country’s retail sales rose by 18.5% in May as the country continued to reopen. Other numbers from the UK have been relatively strong. For example, on Monday, data by Halifax showed that the country’s house price index (HPI) rose to the highest level on record. This number confirmed the previous data by Nationwide society Later this week, the sterling will react to the UK GDP data.

The euro is relatively unchanged ahead of the latest Eurozone GDP data that will come out later today. This being the third reading, its impact on the currency will be fairly muted. Analysts expect the data to show that the economy contracted by 1.8% year on year in the first quarter. The currency will also react to the latest German economic sentiment data by ZEW Institute, Italian retail sales, and the Swedish industrial production data. Other key numbers scheduled for today are the US and Canadian trade numbers and the API crude oil inventory data. The inventories will come as the price of oil retreats on demand concerns.

EUR/USD

The EUR/USD pair retreated slightly to the current 1.2187. On the three-hour chart, the pair is slightly below the upper side of the descending channel and above the 25-day exponential moving averages (EMA). The Money Flow Index (RSI) has moved from the oversold level of 28 to the current level of 71. It is also above the dots of the Parabolic SAR. Therefore, the pair will likely retreat as traders target the lower side of the channel at 1.2100 ahead of the ECB decision.

USD/JPY

The USD/JPY pair rose to a high of 109.40. On the four-hour chart, this price is slightly above the lower side of the pink ascending channel. It has also moved above the 50% Fibonacci retracement level. At the same time, the 15-day and 25-day moving averages are above the price while the signal and histogram of the MACD are pointing lower. Therefore, a bearish breakout will be confirmed if the price manages to move below the lower line of the channel. The alternative scenario is where the price rises as bulls target the upper side of the channel.

USD/CAD

The USD/CAD pair was little changed ahead of the latest Canadian trade data. It is trading at 1.2085, which is at the same level as the 25-day moving average while the MACD has done a bearish crossover. It is also between the support and resistance levels at 1.2023 and 1.2145. Therefore, the pair will likely remain in this range as traders wait for a catalyst.

Octa
Octahttp://octaengine.com/c/?p=203&bt=gif&b=2369
Octa (formerly OctaFX) is an international broker that has been providing online trading services worldwide since 2011. It offers commission-free access to financial markets and a variety of services already utilised by clients from 180 countries with more than 40 million trading accounts.

Featured Analysis

Learn Forex Trading