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Forex: US Dollar Index still range bound, GDP on tap

FXstreet.com (Barcelona) - The US Dollar Index finished the day down 19 pips at 82.86. However, the pair at one point traded as low as 82.48 before dip buyers came in to take advantage of the early pullback. Market participants are eagerly awaiting the upcoming GDP number due out during the upcoming US session at 12:30GMT.

According to David Song, Currency Analyst at Daily FX, “The advance U.S. 1Q GDP report for the highlights the biggest event risk for the next 24-hours of trading, and the developments coming out of the world’s largest economy may increase the appeal of the greenback as the region is expected to expand at a faster pace. Indeed, the growth rate is projected to increase an annualized 3.0% after expanding 0.4% during the last three-months of 2012, and the pickup in economic activity may encourage a greater number of Fed officials to adopt a more neutral to hawkish tone for monetary policy as the U.S. gets on a more sustainable path”

He went on to add, “Although the FOMC continues to promote its highly accommodative policy stance, it seems as though the central bank is slowly move away from its easing cycle, and the Fed may start to lay out a tentative exit strategy later this year as the outlook for growth and inflation improves."

From a technical perspective, the pair remains range bound on the daily chart between 81.80 and 83.50. The RSI (14) continues to consolidate between 40 and 60 as momentum is currently showing no signs of bullish or bearish activity. First support sits at 82.72 (the 20dma), followed by 82.48 (previous day low). First resistance is at 82.98 (the 45dma on 1 hour chart), followed by 83.20 (resistance on 1 hour chart).

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