EUR/USD, USD/CAD, and USD/JPY Analysis: Dollar Falls Against the Backdrop of Economic Data


The US dollar fell as economic data fueled expectations that the Federal Reserve will ease monetary policy. Data released earlier Thursday showed GDP grew 4.9% year-on-year in the third quarter, down from a previously reported 5.2%. The consumer spending component of GDP in the third quarter was revised downward to 3.1% from 3.6% previously. Separate data released Thursday showed that the number of Americans filing new claims for unemployment benefits increased slightly last week, indicating underlying economic strength as the year comes to a close. Investors are now awaiting Friday's data on the core US Personal Consumption Expenditures (PCE) index.


The EUR/USD pair is showing a moderate decline, correcting after yesterday's growth. According to EUR/USD technical analysis, immediate resistance can be seen at 1.1020, a break higher could trigger a move towards 1.1083. On the downside, immediate support is seen at 1.0974, a break below could take the pair towards 1.0934.

In the absence of significant economic releases, the movement of the euro is determined by external factors. IFO data in December showed that the business situation index for German retail trade fell from -8.8 points to -12.1 points. IFO experts note that consumers are less active. It is also worth noting the comments of the head of the Central Bank of the Netherlands, Klaas Knot, who joined the opinion of his ECB colleague, Bundesbank President Joachim Nagel, and said that the regulator will need a long time to ensure a stable decline in inflation to the target level of 2.0% and move on to reduction interest rates.

Based on the highs of two days, a new ascending channel has formed. Now the price has moved away from the upper border of the channel and may continue to decline.


On the USD/CAD chart, the pair is showing moderate growth after yesterday's fall to 1.2760. Immediate resistance can be seen at 1.3352, a break higher could trigger a rise towards 1.3394. On the downside, immediate support is seen at 1.3273, a break below could take the pair towards 1.3200.

The Canadian dollar extended recent gains against the US dollar on Thursday as slightly positive Canadian retail sales data and a weaker dollar strengthened the Canadian dollar. Monthly retail sales in Canada rose 0.7% in October but are expected to remain flat in November. Sales in October totaled C$66.95 billion (US$50.19 billion), driven by higher vehicle and component sales. Sales increased in seven of nine sub-sectors, representing 84.1% of total retail sales. Retail sales increased by 1.4% in volume terms. Based on a preliminary estimate, the agency said November sales were likely unchanged.

At the lows of the week, a new downward channel has formed. Now the price has rebounded from the lower border and may continue to rise.


On the USD/JPY chart, the pair is recovering after yesterday's decline. Strong resistance can be seen at 142.56, a break higher could trigger a rise towards 142.98. On the downside, immediate support is seen at 141.51. A break below could take the pair towards 141.00.

Government forecasts for economic growth were published yesterday. In fiscal year 2023-24, GDP will increase by 1.6%. The growth of the indicator should be facilitated by increased external demand for Japanese cars and tourist trips to the country, which will compensate for the decline in domestic consumption, as well as adjustments in income taxes and wages. November inflation data will be released on Friday, with the annualised consumer price index expected to fall from 3.3% to 2.6% and the core rate from 2.9% to 2.5%. The implementation of the forecasts may delay the Bank of Japan's decision to change the current ultra-loose monetary policy and put pressure on the yen.

Based on the lows of two days, a new downward channel has formed. Now the price is approaching the upper limit, from where it can continue to decline.

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