The strong U.S. GDP boosted the dollar while pound holds dynamically as Brexit is on power of the European Union. The euro was the worst-performing currency after a sharp fall which is still ongoing due to decreased sentiment. EUR/USD dropped severely and met our suggested target (see technical analysis below).
U.S. Strong GDP Helps Dollar to Climb Against the G10
The strong U.S. GDP data boosted the U.S. dollar against all the G10 currencies on Thursday and early Friday, apart from the British pound and the Canadian dollar. The U.S. Bureau of Economic Analysis published the GDP report revealing that the U.S. economy grew at an annualised rate of 2.1% the fourth quarter of 2016 above the last estimate of 1.9% and revised up to 3.5% in the third quarter. Moreover, the consumer spending which accounts for around two-thirds of the U.S. economic activity came out stronger than anticipated while government spending decreased slightly. However, the overall revision for GDP growth in while 2016 remained 1.6%, the slowest since 2011.
Meanwhile, the U.S. President Donald Trump plans to unveil 1 trillion dollars in an infrastructure plan over the next ten years, later in the year, according to U.S. Transportation Secretary Elaine Chao. The plan will include energy, water, transportation and probably broadband and veterans’ hospitals. Though, after U.S. Trump’s administration failed to pass the healthcare bill, U.S. investors are a bit conservative whether Trump will be able to push through economic policies like this.
USD/JPY – Technical Outlook
The USD/JPY pair is ending the week higher after the aggressive sell-off that created in the previous two weekly sessions. The rebound on the 110.10 support level and on the 200-weekly SMA is driving the pair higher and added almost 0.5% at its value this week. Now, the price appears to have the chance of heading on towards our suggested level at 112.90 which coincides with the 50-daily SMA (see previous technical analysis here: https://bit.ly/2ofLGHV).
Technically, we remain bullish on the pair for the short-term traders as the technical indicators reversed from falling to rising momentum. The RSI indicator created a retracement from the 30 level and is close to 50 level as well as the MACD oscillator is moving higher and printed a bullish crossover with the trigger line.
