When is the US GDP report and how could it affect EUR/USD?
|US Q2 GDP Overview
Thursday's economic docket highlights the release of the Advance second-quarter US GDP report, or the first estimate, scheduled at 12:30 GMT. Growth in the world's largest economy is expected to have accelerated to 8.6% annualized pace during the April-June period, up from 6.4% recorded in the first quarter.
As Eren Sengezer, Editor at FXStreet, explains: “Consumer spending amid economic reopening and vaccinations is likely to play an important part in the US economic performance in the second quarter. However, the service sector seems to have lost some momentum in the last month due to the heightened concerns over the coronavirus Delta variant and this situation could weigh on the growth.”
How Could it Affect EUR/USD?
Ahead of the key release, the post-FOMC US dollar selling bias pushed the EUR/USD pair to three-week tops, around the 1.1880 region. The Fed on Wednesday indicated that it is in no rush to scale back its bond purchases and would wait for a couple of quarters of above-trend growth/inflation. Hence, a stronger than expected GDP print might do little to provide any respite to the greenback.
Conversely, a softer reading will reinforce expectations that the Fed will stick to its ultra-lose monetary policy stance for a longer period and exerted some additional pressure on the already weaker USD. This, in turn, suggests that the path of least resistance for the buck remains to the downside, which should pave the way for an extension of the pair's recent bounce from the vicinity of mid-1.1700s, or three-and-half-month lows touched last week.
Meanwhile, Yohay Elam, Analyst at FXStreet offered a brief technical outlook for the major: “Euro/dollar is benefiting from upside momentum on the four-hour chart and has convincingly broken above the 100 Simple Moving Average. It is now tackling the 200 SMA, which is just above the daily high of 1.1863. The Relative Strength Index is nearing 70 and another upswing could put it in overbought territory.”
Yohay further provided important technical levels to trade the pair: “Above 1.1863 mentioned earlier, the next significant barrier is 1.1880, which held the pair down in mid-July. It is followed by 1.19 and then by 1.1945. Support awaits at 1.1840, the daily low, and then by 1.1820, 1.1770 and the July trough of 1.1750.”
Key Notes:
• US Q2 GDP Preview: Economy to continue to expand at strong pace, eyes on FOMC
• EUR/USD Forecast: Powell punches the dollar, infrastructure deal, GDP could extend the trend
• EUR/USD flirts with 3-week highs near 1.1880 ahead of data
Description
The Gross Domestic Product Annualized released by the US Bureau of Economic Analysis shows the monetary value of all the goods, services and structures produced within a country in a given period of time. GDP Annualized is a gross measure of market activity because it indicates the pace at which a country's economy is growing or decreasing. Generally speaking, a high reading or a better than expected number is seen as positive for equities, while a low reading is negative.
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