The Dollar Continues to Decline Ahead of US GDP Data

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The Fed's rate cut and a series of weak macroeconomic data from the US have contributed to the resumption of the downward trend for the USD in major currency pairs. For instance, EUR/USD buyers are pushing the price towards the key level of 1.1200, GBP/USD has consolidated above 1.3400, and USD/CAD has hit new year-to-date lows at 1.3440. However, in the upcoming trading sessions, important macroeconomic data are expected, which could either strengthen the current trend or lead to a corrective reversal.

USD/CAD

Weak consumer confidence data from the US for September, along with the economic stimulus measures announced by China's central bank, have boosted demand for commodity currencies. Both the Canadian and Australian dollars have strengthened to strategic levels, the breach of which could shift medium-term trends.

Technical analysis of the USD/CAD pair suggests the potential for further declines towards the 1.3360-1.3300 range, as several reversal patterns signalling selling pressure have formed on higher timeframes. The bearish scenario could be invalidated if the price confidently consolidates above 1.3500-1.3480.
Key events affecting the pair's price formation include:

  • Today at 17:00 (GMT +3:00) — US New Home Sales data
  • Today at 17:30 (GMT +3:00) — US Crude Oil Inventories data
  • Tomorrow at 15:30 (GMT +3:00) — US GDP data release

EUR/USD

At the start of the trading week, weak figures were published for the Eurozone’s Manufacturing PMI (44.8 versus 45.7) and Germany’s Business Climate Index (85.4 versus 86.1).

These data led to a retest of the 1.1100-1.1080 range, but sellers were unable to break below. Yesterday, euro bulls regained momentum, with the price not only rebounding from 1.1100 but also preparing to test the key resistance level at 1.1200.

Technical analysis of EUR/USD suggests that the pair could reach last year's highs at 1.1280 if 1.1200 turns into support.

In the upcoming trading sessions, key events to watch include:

  • Today at 10:00 (GMT +3:00) — ECB non-monetary policy meeting
  • Today at 15:30 (GMT +3:00) — Speech by ECB Supervisory Board member Elizabeth McCaul