THE US ECONOMY FELL BY 2.6% IN FOURTH QUARTER
The EUR/USD price showed little reaction to the GDP data from the US that was partially offset by the statement of US President at the economic forum in Davos. Economic expansion of the world’s largest economy for the fourth quarter of 2017 was 2.6% which is 0.4% less than the forecast, which is helping the bulls push the pair quotes higher.
Among positive news for the US dollar was the considerable increase of durable goods orders in December by 2.9% against the 0.9% forecasted and 1.7% in the previous period. Investors are afraid to accumulate positions ahead of the weekend and after the strong increase of the EUR/USD price during the last trading sessions.
The British pound was supported by positive statistics on GDP growth in the UK, which according to the preliminary report accelerated to 0.5% which is 0.1% more than the expected figure. The pound is consolidating after the confident increase and we do not expect any sharp moves today.
The core consumer price index in Canada for December decreased to -0.4% against the -0.3% forecasted. Deflation in the country may restrain the Bank of Canada from new rounds of monetary tightening in 2018, but the USD/CAD quotes are still under pressure from the increase of crude oil prices, which traditionally have a strong impact on the Canadian dollar.
The EUR/USD keeps correcting downwards after it was not able to fix above the psychologically important 1.2500. The MACD signal line on the 15-minute chart has crossed the zero point which may be a signal for further price declines with potential targets at 1.2300 and 1.2200. In order to continue upward movement, the price needs to overcome the 1.2500 resistance line.
The GBP/USD has been trying to gain a foothold above the 1.4200 level and in case of success the immediate goals are likely to be at 1.4400 and 1.4500. In order to change the current positive trend to negative, the price needs to break through the inclined support line and the local low at 1.4100. Doing so may trigger the bears to pull the quotes down to 1.4000 and 1.3850.
The USD/CAD was not able to break through the support at 1.2300 and may rebound upwards to 1.2365. Following that, growth may continue upwards to the 1.2450-1.2500 range. The additional stimulus for the increase may come from the MACD signal line crossing the zero point. The potential decline may be restrained by the support at 1.2235.