Greenback Stays Firm As Data and FED Hints At Recovery
Data from Eurostat today showed that gross domestic product (GDP) expanded in most Eurozone countries, except for contractions of 0.4% and 0.1% in Greece and Latvia, respectively. In Germany, GDP grew 0.7%. Meanwhile, France saw an increase of 0.5% in GDP growth. For the whole euro area, GDP was up 0.5% in the first quarter of 2016. The latest reading is a little lower than a 0.6% increase as expected by economists. The common currency seems to be firming up as positive data on economic growth shows up.
According to data released on May 12, after eliminating seasonal effects, the number of people in U.S filing for unemployment insurance surged up to 294,000 in the week ending on May 06. This is a 15-month peak, being the highest number since February 2015. Economists had expected a reading of 277,000 jobless claims in the last week, a little higher than the 274,000 claims in the previous week. After the report, the USD stumbled sharply against its peers and then trimmed its losses promptly thanks to data on foreign trade.
According to a report from the US Bureau of Labor Statistics yesterday,import prices for April rose 0.3% following a similar rise in the preceding month. The rise was driven by a recent rally in fuel prices. The price rises in the last two months were at the fastest pace since last May. In comparison with a year earlier, the price index for US imports edged down 5.7%.
Meanwhile prices in the export sector posed the first monthly advance in over a year by climbing up 0.5% last month. On yearly basis, the index declined 5.0%. However, both price indices for imports and exports in April recorded their smallest drop since the beginning of 2015.
The US economy currently is presenting a brighter outlook in terms of a recovery, and the markets are optimistic on upcoming data releases. April core retail sales are forecast to increase 0.6% from a 0.2% rise in the month prior. Producer price index is also expected to inch up 0.3%, after sliding 0.1% previously. The US dollar is expected to stay strong in the near future, the data reinforces market expectations.
Fig. EURUSD D1 Technical Chart
The USD is on track to strengthen against the euro since the past few sessions. EURUSD is tumbling from the resistance of 1.16154 formed on May 03, the highest level since August 2015. However, the signal trend indicator still encourages a long position as the green trend indicator arrow has appeared under the price chart. The level 38.2% of Fibonacci retracement is anticipated to turn into a support for the price.
Buy at 1.13638, Stop loss at 1.13067, Take profit at 1.14312