Dollar Index upswings unhurt

The USDIndex slipped slightly following the mix of data, where Q1 GDP came in slightly better than consensus, jobless claims were slightly higher, and the trade deficit was wider than expected. EURUSD edged over 1.1140 from 1.1135, while USDJPY was fractionally lower at 109.65 from over 109.70. Equity futures continue to indicate a moderately higher Wall Street open, while yields were little changed.

US initial jobless claims rose 3k to 215k in the week ended May 25 after holding steady at 212k in the May 18 week (revised from 211k), and tumbling 16k to 212k in the week before that.

US Q1 GDP growth was fractionally revised down to a 3.1% pace, beating forecasts, after posting a better than expected 3.2% gain in the Advance report. Remember, Q4 posted a 2.2% clip, with Q3 up 3.4%. For Q1, consumption was bumped up to 1.3% versus 1.2% initially. Fixed investment was nudged down to 1.0% from 1.5%, with nonresidential spending at a 2.3% rate from 2.7%, while residential spending was knocked down to -3.5% from -2.8%. Government consumption was revised up to 2.5% versus 2.4% previously. Inventories contributed $28.7 bln versus $31.6 bln. Net exports added $52.1 bln from $56.4 bln. The PCE price index slipped to 0.8% versus 0.9%. The core rate was 1.0%, down from 1.3%.

The USDIndex remains above the 98.00 barrier for the day, while it is holding strongly, close to year high of 98.24. The short term outlook has been denominated today with consolidation, however the overall picture remains on track with the upwards channel seen the past 2 months. The asset is currently set above 20-, 50- and 200-day SMA, with the 2nd one providing a strong Support in the near term future.

The intraday RSI has flattened at 63 due to the consolidation moves seen today, however in the higher timeframe continues to point to the upside. Interestingly, MACD lines in the near and long term formed a bullish cross, suggesting the continuation of the positive momentum. Hence a break of last week’s high could open the way towards the next barrier at the 99.00 Resistance level seen since May 2017. Support holds at the 20-day SMA at 97.50, however only a break of the 50-day SMA could develop concerns over the continuation of the up-channel.

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Andria Pichidi

Market Analyst

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