How to trade the US GDP with USD/JPY

Buying USD/JPY Scenario

• Tradable Positive Trigger: +1.27 deviation (2.56%) [BUY Pair]
• Key Resistance Level: 109.50

If it comes out at higher than expected with a relative deviation of +1.27 or higher (2.56% or higher in actual terms), the pair may go up reaching a range of 27 pips in the first 15 minutes and 73 pips in the following 4 hours.

108.90 was a swing low in late May and is the first level to watch. Stronger resistance is at 109.50 which was a stepping stone on the way up. The round number of 110.00 is next.

Selling USD/JPY Scenario

• Tradable Negative Trigger: -1.53 deviation (2.28%)  [SELL Pair]
• Fundamental Support Level: 108.10

If it comes out lower than expected at a relative deviation of -2.14 or less (1.86% or lower in actual terms), the USD/JPY may go down reaching a range of 27 pips in the first 15 minutes and 59 pips in the following 4 hours.

108.10 was a swing low in late May. Close by, 107.90 capped the pair on its way up. Further down, support awaits at the round number of 107.00. 

USD/JPY Levels on the Chart

More data

The US first-quarter GDP is expected to be revised upward to 2.4% over the quarter annualized after 2.3% preliminary estimate.

The combination of strong GDP growth, solid US labor market, and core PCE price index firmly above 2% is seen keeping the Federal Reserve firmly anchored on its path of gradual interest rate normalization with June rate hike being a sure shot.

See: US GDP revision Preview: First quarter growth seen slightly higher than originally estimated

In the last five releases, the USD/JPY moved, on average, 21 pips in the 15 minutes after the data release and 63 pips in the following 4 hours.

The previous release had a positive surprise of +1.46 in terms of relative deviation and the USD/JPY reached a 41 pip range in the first 15 minutes and a range of 48 pips 4 hours thereafter. 

Follow the publication of the figure on the economic calendar. Watch out for the data from the Market Impact tool, projecting the potential price changes according to the deviation. Here is the Market Impact Studies Users Guide.