Friday, 29 Oct 2010

Dollar Strength Continues Prior to GDP Numbers

The dollar was firmer headed into afternoon trading in Europe. Traders are anticipating US GDP numbers later today to close out the week. A number of technical signals display dollar strength and a triangle pattern has formed on the EUR/USD chart.

Prior to the release of US GDP numbers, the dollar rose against the major currencies. The EUR/USD was lower at 1.3860, down from an opening day price of 1.3902. The GBP/USD was down slightly at 1.5920, after opening the day at 1.5945. The dollar was also firmer versus the yen as the USD/JPY was trading at 80.80, up from 80.55.

This afternoon traders will be anticipating the release of US Advanced GDP at 12:30. The market will be looking for economic growth at a pace of 2.1% for Q3.

The dollar continues to correct its downward trend versus the majors. Technical signals show signs of a reversal of the dominant movements over the past 4-months.

The 5-day moving average has recently crossed below the 20-day moving average for the EUR/USD. With the exception of a few false signals, this moving average crossover has been a good indicator of the pair's strength and ensuing trend. Other major pairs such as the Cable and the Swissie have seen their moving averages cross prior to the EUR/USD.

Traders may also notice the formation of a triangle pattern on the daily chart beginning at the high of 1.4157 and the low of 1.3697.

Support for the EUR/USD comes in at 1.3730 with resistance at 1.4030.