US DOLLAR INDEX RETREATS AHEAD OF US INFLATION DATA

American stocks rose sharply after relatively strong corporate earnings from companies like Macy’s and Dollar General. Macy’s shares jumped by over 16% after the firm’s net sales rose to $5.35 billion in the first quarter. Comparable sales rose by 13% while its net income doubled to $286 million. In a separate report, Dollar General said that same-store sales rose by 4.4% in the quarter as growth continued. These results provided hope that the situation among retailers was not as dire as posted by companies like Target and Walmart. Stocks also rose after Broadcom agreed to pay $61 billion to acquire Vmware.

The US dollar index declined after weak economic numbers from the United States. Data published on Thursday showed that the housing sector continued to deteriorate in April. Pending home sales declined by 3.9% on a month-on-month basis. This decline was worse than the median estimate of -2.0%. These numbers came a few days after further data revealed that new home sales declined by 16%. Meanwhile, data by the statistics agency showed that the economy declined by 1.5% on a QoQ basis. Later today, the US will react to the latest PCE data.

The economic calendar will be muted as investors shift to the long weekend in the United States. The economic data to watch will be the upcoming Swedish retail sales numbers. Another important event will be a statement by Philip Lane, ECB’s chief economist. He will likely hint that the bank will start hiking interest rates in July. Meanwhile, in the US, the statistics agency will publish the latest real personal consumption index.

EURUSD

The EURUSD pair continued rising after the weak data from the US. The pair rose to a high of 1.0712, which is close to its highest level since April. The pair rose above the important support level at 1.0646. It also rose above the 25-day moving average while the MACD has remained above the neutral level. It has also risen above the 61.8% Fibonacci retracement level. Therefore, the pair will likely keep rising as bulls target the key resistance at 1.0800.

USDCHF

The USDCHF pair has been in a strong bearish trend in the past few days. The pair has moved from the year-to-date high of 1.00 to the current 0.9600. On the daily chart, the pair has moved along the lower side of the Bollinger Bands. The line of the MACD has crossed the histogram while the RSI has been moving downwards. The pair will likely keep falling as the downward trend continued.

USDCAD

The USDCAD pair has been in a tight range in the past few days. The pair is trading at 1.2786, where it has been in the past few days. The pair is slightly below the descending trendline shown in blue. At the same time, the Stochastic Oscillator and the RSI have been moving downwards. The pair will likely have a bearish breakout if it manages to move below the support at 1.2767.