Dollar dips ahead of GDP report

EUR/USD and GBP/USD are making up for lost ground today, and the US GDP announcement at lunchtime will be in focus. 

Source: Bloomberg

Euro hovers at $1.12
The euro has traded above $1.12 this morning, as the currency makes somewhat of a recovery from yesterday’s plunge.  For a change it wasn’t Greece that did the damage – it was the greenback. The dollar rallied after the Federal Reserve member Jerome Powell stated the US central bank could raise rates twice this year.

Despite the bounce back in EUR/USD today, there is still the fear the dollar could make another push higher. Over the past few months the dollar has been drifting lower, and traders have been dismissive of positive economic indicators from the US, but now it is playing catch up.

The proposals that were put forward by Greece on Monday haven’t been accepted or rejected. For the time being dealers have an optimistic outlook, which has gotten to the stage that no negative news is deemed to be positive news.

EUR/USD has been in an upward trend since March and the resistance at $1.14 is the target, and a drop back below $1.12 will bring the support at $1.10 into play.

GBP/USD eyes $1.58
The pound is pushing higher this morning as traders put the remarks from Jerome Powell behind them. The quick turnaround in the sterling suggests dealers aren’t putting too much weight in Mr Powell’s comments.

The US will reveal the final reading of the first-quarter GDP at 1.30pm ,and the market is expecting a revision up from -0.7% to -0.2%, and GBP/USD will extended it gains should expectations be missed. The US central bank has been talking about increasing interest rates this year, but if the growth rate for the first three months of the year is negative a rate hike seems less likely, and will push GBP/USD higher.

GBP/USD has been in an upward trend since April, and $1.59 is the target and any move lower will find support in the $1.57 region. 

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