Dollar pressured ahead of US GDP

April 28, 2017 09:54 AM

The Greenback was vulnerable to heavy losses on Friday, with prices tumbling towards 98.80 as the mixture of soft economic data from the U.S. this week, and rising uncertainty over Trump’s proposed tax reforms weighed on sentiment.

Much attention may be directed towards the pending Q1 2017 U.S. GDP report that is being released later today and is widely expected to display a slowdown in economic momentum as accelerating inflation pressured consumer spending. 

With a potential slowdown in first-quarter U.S. economic growth this year weighing on expectations of the Fed raising interest rates in June, the Dollar may be at threat of further depreciation. From a technical standpoint, the Dollar Index is heavily depressed on the daily charts. Persistent weakness below 98.80 could encourage a further decline towards 97.50.

Commodity spotlight – WTI Crude
Oil markets remain entangled in a fierce tug of war, with oversupply concerns and optimism over OPEC stabilizing the saturated markets. Although WTI Crude staged an impressive rebound during early trading on Friday amid a potential OPEC cut extension, the recent reports of Libya’s biggest oil field reopening may compound oversupply fears, consequently capping upside gains.

The live threat of US Shale’s incessant pumping undermining the OPEC production cut extension may expose oil prices to steeper losses. From a technical standpoint, WTI Crude remains bearish on the daily charts with bears potentially exploiting the technical bounce to drag prices lower. Previous support at $50 could transform into a solid resistance that opens a path towards $47.50. In an alternative scenario, a breakdown below $49.00 may open a similar route to $47.50.

About the Author

Lukman Otunuga is an FXTM research analyst