EUR/USD in an ascending channel after impressive US GDP data

The EUR/USD retreated on Thursday as the market digested the impressive US GDP data and the latest FOMC decision.It is also falling even after the strong European industrial sentiment data. It is trading at 1.2120, which was slightly below the intraday high of 1.2150 

Federal reserve decision

The EUR/USD rose sharply on Wednesday evening after the Federal Reserve delivered its interest rate decision. As expected, the bank delivered a relatively dovish tone as it left interest rates and quantitative easing policies unchanged. 

It will continue buying Treasury bonds worth $80 billion and mortgage-backed securities worth $40 billion every month for a while. Jerome Powell reiterated that the bank believes that the recovery is uneven and that higher rates will hurt the most vulnerable. 

The EUR/USD is today falling even after relatively positive data from Europe. In a report, the European Commission said that consumer confidence improved from -10.8 in March to -8.1 in April. In the same period, services and industrial sentiment rose to 2.1 and 10.7, respectively. This improvement is mostly because of the ongoing vaccination efforts from the UK. 

Further data from Europe showed that the German unemployment rate remained unchanged at 6.0% in April. Nonetheless, the unemployment change increased to 9k, partly because of the lockdowns to tame the virus. 

The EUR/USD also declined as forex traders reflected on the latest US GDP data. The numbers showed that the American economy rallied from 4.3% in the fourth quarter to 6.4% in the first quarter. This figure was better than the expected 6.1% and was mostly because of increased consumer spending. 

Government spending and fixed asset investments also rose. Economists expect that this growth will start slowing down in the next few quarters. The number of Americans filing for initial jobless claims declined to 566,000 from the previous 553,000. 

EUR/USD forecast

On the four-hour, we see that the EUR/USD pair has been in a strong upward trend in the past few weeks. The pair reached the important 78.6% Fibonacci retracement level earlier today and then retreated. Notably, the upward trend is being supported by the 28-day weighted moving average (WMA). It is also between the ascending channel shown in orange. 

Therefore, the pair may continue to decline as bears target the lower side of this channel. It will then resume the upward trend as bulls attempt to move above 1.2150.