Growth in the second quarter for the US economy is expected to have improved by 2.8%. An inline print would be significantly higher than the preliminary estimate of 1.9% and an improvement from the first quarter’s reading of 0.9%.
[B]Fundamental Outlook
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Growth in the second quarter for the US economy is expected to have improved by 2.8%. An inline print would be significantly higher than the preliminary estimate of 1.9% and an improvement from the first quarter’s reading of 0.9%. Any growth beyond the 1% stimulus contribution will ease recession fears and may spark bullish sentiment. The dollar has continued to benefit from the declining growth in other parts of the world as the U.S. looks to be the first to emerge to from the current global slowdown. The technical outlook is calling for a dollar correction with the EURUSD looking to head higher. The greenback may be over bought, as the economy still has to contend with a bottomless housing slump and deteriorating labor market. However, giving the recent drop in oil prices and improvement in durable goods orders, optimism will grow for future growth adding to dollar support.
[B]Technical Outlook[/B]
[B]
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[B][/B]
We wrote yesterday that “the rally from 1.4631 is in 3 waves as is the decline from 1.4908. These waves are most likely waves A and B of either a flat or triangle (yes, wave B can come under the origin of A in a triangle). The path for the next few days should be higher in wave C of either the triangle or flat.” We stand by this outlook and expect a push into 1.4850 by week’s end. Very short term, a dip below 1.4666 is possible but support should be strong at 1.4635/40.
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