Dollar Steady Ahead of Housing Starts and Confidence
The dollar is trading in a tight range ahead of housing starts, which will be the highlight for economic data on Friday. A weaker than expected number would likely be the catalyst for dollar weakness heading into the weekend. Despite a very soft GDP report on Thursday, the weaker than expected industrial production and Philly Fed survey, allowed the euro to bounced back after hitting the 1.3670 level.
The Eurozone posted a trade surplus of 15.2 billion in March, up from 15.2 billion in the previous month. Exports dropped 0.5% m/m, while imports declined 0.6% m/m. The trade surplus narrowed marginally to EUR 43.9 billion in Q1 from EUR 44.1 billion in the previous quarter, although with the strong EUR and lower energy prices, the real figure may look somewhat better. Still, data suggests a limited contribution to overall growth in Q1, which may help to explain the weaker than expected GDP number.
Next up for traders is the US housing starts report which is expected to show that construction started on 980K homes.
The EURUSD sliced through long-term trend line support early in the trading session but was able to recover following mixed data. While the initial jobless claims and NY Empire Manufacturing report showed relatively strength, the Industrial Production report along with the Philly Fed were weaker than expected. Resistance on the currency pair is seen near the 10-day moving average at 1.3787.
Momentum on the currency pair is negative as the MACD (moving average convergence divergence) index is printing in negative territory with a downward sloping trajectory. This foreshadows future negative price action. The RSI (relative strength index) which is an oscillator that measures momentum along with overbought and oversold levels, moved lower with price action reflecting accelerating negative momentum while printing near 34, which is the lower end of the neutral range.
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