EUR/USD remains bid ahead of US Q4 GDP while EUR/GBP and USD/CAD stabilise
Outlook on EUR/USD, EUR/GBP and USD/CAD ahead of US Q4 GDP, following Bank of Canada’s 25 bps rate hike to 4.50%.
EUR/USD pushes higher ahead of US Q4 GDP release
EUR/USD is trading in fresh nine-month highs ahead of Thursday’s 1.30pm (GMT) US forth quarter (Q4) advance gross domestic product (GDP), durable goods orders, wholesale inventories and unemployment claims releases. Advance GDP is expected at 2.6% quarter-on-quarter versus 3.2% previously and durable goods orders at 2.4% month-on-month (MoM) versus -2.1% with unemployment claims forecast at 203k versus 190k.
The currency pair is about to reach the late April 2022 high and the 50% retracement of the 2021 to 2022 descent at $1.0936 to $1.094. This should remain the case while it stays above the January uptrend line at $1.0885 and, more importantly, above Tuesday’s low at $1.0836 on a daily chart closing basis. Above $1.094 beckons the psychological $1.10 mark.
Strong support remains to be seen at last week’s $1.0766 low. While above it, and the mid- to late December highs at $1.0736 to $1.0715, the medium-term uptrends remain intact.
EUR/GBP holds despite UK car production slipping in December
EUR/GBP slid back from Wednesday’s £0.8852 high and now trades back around the £0.88 mark as UK car production fell 17.9% year-on-year (YoY) in December 2022 after two consecutive months of growth. Annual car production dropped by close to 10% in 2022 due to a global shortage of semiconductors and Covid-19 related supply chain issues.
The cross thus so far fell short of its significant £0.8877 to £0.8897 resistance area which sits between the December and current January highs.
Support below the 9 January £0.8769 low can be spotted along the 55-day simple moving average (SMA) at £0.8735 and last week’s low at £0.8722. If fallen through, the 23 November high and 19 December low at £0.8701 to £0.8691 could once again be reached. Further down sits the 28 November high at £0.8676.
USD/CAD remains under pressure post 25 basis point rate hike
USD/CAD’s reaction to the widely anticipated 25 basis point (bp) rate hike to 4.50% by the Bank of Canada (BoC) on Wednesday has been muted with the cross remaining in a low volatility sideways trading range. With the central bank signalling that it plans to step aside and let higher rates work on inflation which it expects to slip back down towards 3% by mid-2023, weakness in the Canadian dollar seems to be on the cards.
In the immediate future the cross continues to hold above its C$1.3322 January low and the C$1.3317 late November low. While this continues to be the case, the currency pair could head back up towards last week’s high at C$1.352. For this to happen, it needs to overcome Wednesday’s high at C$1.3428, though.
Failure at C$1.3317 could lead to the November trough at C$1.3227 being revisited.
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets
- Forex
- Shares
- Indices
