Bullish GDP Report Sends Dollar Sharply Higher.

The U.S. Dollar surged to the upside following a more robust U.S. GDP report than forecast.

The U.S. Dollar surged to the upside following a more robust U.S. GDP report than forecast. Traders bought the Dollar with both hands after becoming more optimistic about the U.S. economic recovery.

The EUR USD is trading sharply lower at the mid-session. The combination of a better than expected U.S. GDP Report and concerns over sovereign debt issues in Greece and Portugal pressured the Euro. The charts indicate that the major 50% price at 1.3800 is the next downside target.

The combination of a strong U.S. economy and a weak U.K. economy is helping to drive the GBP USD lower today. Technical factors also contributed to the weakness. The Pound had been trading inside of a tight range for the past 4 days, indicating impending volatility. Stops were triggered when the market broke 1.6076, fueling an acceleration to the downside. Momentum indicates that 1.5895 is the next likely target over the near-term..

The USD JPY surged to the upside after traders took risk off the table following the release of the better than expected U.S. GDP Report. Investors have chosen to trade the economic outlook today rather than risk sentiment. This is pressuring the Yen on the perception that the U.S. economy will grow faster than the Japanese economy.

The USD CHF continued to affirm its uptrend with a strong move to the upside today. Strength in the U.S. economy coupled with a change in trend to the upside on the weekly chart has triggered sizeable rally. The charts indicate that 1.0942 is the next likely upside target over the medium term.

The upside action in the USD CAD indicates that traders have decided to focus on the strength in the U.S. economy rather than the Canadian economy. Both countries issued better than expected 4th quarter GDP reports but the U.S. currency has won out, most likely because of weaker crude oil and gold prices. Both commodities are major components of the Canadian economy.

The AUD USD is under pressure despite stronger demand for equities. The strength in the U.S. GDP number brings the Fed closer to raising interest rates. This is being seen as a threat to the interest rate advantage the Aussie currently enjoys. In addition, position squaring ahead of the Feb. 2nd Reserve Bank of Australia policy announcement is pressuring this currency. Traders are expecting the RBA to pass on an interest rate hike at this meeting after two consecutive hikes.

The New Zealand Dollar is treading water today. Higher equity markets are underpinning the NZD USD but pressure is coming from the lower Aussie Dollar which is limiting gains. The weekly chart indicates that this market is poised to drop sharply lower once the last main bottom at .6970 is violated.