EUR/USD stuck in ascending channel after strong US GDP data
UK stocks rallied strongly after the relatively strong results from some of the UK’s biggest firms. In a report, NatWest, formerly known as Royal Bank of Scotland, said that its profits surged in the first quarter but warned about the ongoing FCA investigation. In another report, Standard Chartered also said that its revenue and profits rose, helped by its Chinese business. Royal Dutch Shell shares rose after its strong earnings and the decision by the management to boost its dividend. Meanwhile, BT, the telecommunication giant, soared after reports that it was exploring selling BT Sports. Elsewhere in Europe, the DAX index declined by 0.27% while in France, the CAC 40 rose by 0.50%.
The New Zealand dollar retreated against the US dollar even after the strong trade numbers from the country. According to the statistics agency, exports rose from N$4.5 billion in February to N$5.68 billion in March. Similarly, imports rose from N$4.3 billion to February to more than $5.6 billion in March. As a result, its trade surplus rose to N$16 million. Recent numbers from New Zealand have been relatively positive recently because of the ongoing recovery. For example, data released today showed that business confidence improved to -2 while the RBNZ own activity rose by 22.2%.
The US dollar gained slightly as the market continued to digest the FOMC decision made yesterday. In it, the bank left its interest rate and quantitative easing policies unchanged. It also said that it was not worried about inflation, which it sees as being temporary. The currency is today reacting to the first estimate of US GDP numbers. Data showed that the economy rebounded by 6.4% in the first quarter after rising by 1.9% in the fourth quarter. This recovery was mostly because of high consumer spending as the government gave stimulus checks worth $2,000 to most people. Further data showed that the initial jobless claims declined to 553,000.
The EUR/USD retreated after the latest US GDP and EU confidence numbers. It declined from an intraday high of 1.2150 to the current 1.2118. On the four-hour chart, the pair moved from the upper side of the ascending channel and is still at the same level as the 23.6% Fibonacci retracement level. The price is still slightly above the 25-day moving average. Therefore, the pair may keep retreating as bears target the lower side of the channel again. Still, overall, the pair will remain in a bullish trend so long as it is above the 25-day EMA.
The NZD/USD pair retreated today as the market continued to reflect on the Fed decision. On the four-hour chart, the pair is slightly below the 38.2% Fibonacci retracement level. It has also moved back to the ascending channel shown in pink while the overall uptrend is being supported by the 25-day moving average. However, the MACD is showing signs of a bearish divergence. Therefore, like the EUR/USD pair, this price will likely continue moving lower as bears target the lower side of the channel.
The USD/JPY pair rose to a high of 109.07, which is the highest it has been since April 28. On the hourly chart, the pair has moved above the 25-day and 15-day moving averages while the awesome oscillator and MACD have moved above the neutral level. Therefore, the pair looks like it is on a cusp of a major bullish breakout if bulls manage to hold steady above the resistance at 109.