Today Statement: Dollar Pares Obtains as GDP Beat Prospects

Dollar weakens in early US session after release of better than expected GDP report. Q3 GDP in US showed stronger than expected growth at 3.5% annualized rate versus consensus of 3.0%. It's also the first growth figure in more than a year, boosted by stimulus drive gains in consumer spending and home building. Price pressure was tamer than expected with 0.8% rise in price index and 1.4% rise in core PCE. Also released from US, initial jobless claims dropped slightly to 530K.

Dollar and yen are both sold off after release of the data but the strength of selling is so far mild. Stocks in US opens mildly higher only while crude oil and gold also recover from intraday low. 1073 level will be an important near term resistance in S&P 500 and we'll stay slightly bearish in stocks as long as this resistance holds. Dollar's retreat drags 4 hours MACD below signal line and suggests that an intraday top is in place at 76.57. Some consolidations would be seen in the greenback and the index could pull back to 4 hours 55 EMA (now at 75.81). But we'll favor the bullish case that dollar index has bottomed as long as 75.56 minor support holds and would anticipate another rise to take on 77.47 resistance.

Based on ActionForex.com Technical Outlook

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