Dollar Strengthens As Trade Talks Progress

Intraday Technical Analysis 29 March

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The USD continued to maintain the gains amid a host of factors. The revised GDP for the fourth quarter saw the US economy rising 2.2% compared to the initial estimates of 2.6%. This was in line with YoY estimates for 2018 and it closed out the year with a 2.9% GDP growth rate, just shy of the Trump administration’s 3.0% growth target.

Trade talks with China progressed as U.S. trade representatives arrive in Beijing today for meetings. The last trading day of the month and the first quarter could see some position balancing taking place which could keep the USD a bit volatile.

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Brexit Stalemate Sours Sentiment for Sterling

The British pound fell over 0.87% on the day on Thursday after the UK parliament failed to build a consensus on proposing alternative options for the Brexit deal. This prompted PM May to pull the vote on the deal for another day. The uncertainty on the Brexit continues with the likelihood of a hard Brexit still on the table. The currency extended losses for a second consecutive day.

Will GBPUSD Continue to Fall?

The currency pair has been trading within the range of 1.3312 resistance and 1.2972 level of support for the most part this month. As long as the support level holds, the GBPUSD could maintain this sideways range for a while. The lower support shows a confluence with the rising trend line as well. This adds weight to the view that the support level will likely hold in the near term.

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Euro Subdued On Weak Economic Confidence

The common currency continued to extend losses for a third consecutive session. Economic confidence in the region fell to 105.5 in March, marking the lowest level since October 2016. Data from Germany was also disappointing as inflation eased to a pace of 1.3% on the month in February, down from 1.5% previously.

Can the EURUSD Bounce Off the Support?

The currency pair has extended the declines lower to test the support area of 1.1217. A further extension lower could push the common currency to decline to lows of the 1.1174 region. The Stochastics indicate that the currency pair is strongly oversold and this could offer some short term respite to the upside. Still, the gains are unlikely to come by with the minor resistance at 1.1295 likely to hold the correction.

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Gold Loses over 1%, Falling for the Third Session

The precious metal extended declines for a third consecutive session with the declines gaining momentum. Gold prices lost close to $18 on Thursday. The declines came amid the general risk appetite turning positive after the initial concerns of a recession that plagued the markets earlier this week. US and China trade talks also contributed to the sentiment as investors shed safe-haven assets.

Can XAUUSD Hold the Support?

The drop in gold prices sent the precious metal to test the support area of 1290.37 – 1284.65. A break down below the support could trigger the descending triangle pattern and could see gold prices posting further lows. For the moment, we expect the support to hold out in the short term but the bias to the downside increases.

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