Risk trades are back after US GDP. For how long?

US GDP coming way better than expected at 3.5% brought back the risk trades. Long gone are times when better than expected US news meant stronger USD. In today's environment strong US data means recession is over, the economic patient is cured, we all sell the USD and live happily forever after. Well, let's see how tomorrows PMI numbers come out. If they disappoint, we could very easily lose today's gains in equities and commodities as risk aversion would likely come back.

As said before, USD was sold across the board (except against JPY of course). Gold bounced of two trendlines support and formed a nice bullish engulfing pattern. Bias would turn down only in case of a break of 1030.

The USD index broke a very important downward sloping trendline few days ago and came down to test it. In an ideal world it would bounce off this "resistance turned to support". If we hold 75.70 than the bias is still up.

I expect risk trades to continue (sell USD, buy equities and commodities)to continue through Asia and probably London session as well. However, if Chicago PMI disappoints than we could see a reversal. In EURUSD this idea translates to up move to 4920 (61.8% of move from 5060 to 4680) and then back down to 4700 area.

There is also an interesting set up in GBPUSD. Daily chart shows two resistance points: 6680 and 6745. We can expect a strong selling pressure there. However, if this level gives way, there is really no resistance above it and price should easily reach 1.7050 level (previous high)