EUR/USD: Focus on US GDP, US dollar vulnerable to sell the fact trade


  • EUR/USD remains on the defensive, having found acceptance below 1.176. 
  • The recent surge in dollar index suggests markets may have priced-in a better-than-expected Q1 US GDP. 
  • EUR/USD may see a corrective bounce post-GDP. 

EUR/USD may see a corrective bounce if the preliminary first-quarter US GDP reading matches or fails to beat expectations by a big margin. 

The upbeat US retail sales data released a week ago pointed to a stronger economy in the first three months than previously expected. Notably, the widely-tracked Atlanta Fed's GDPNow tracker rose to 2.8 percent following the release of the retail sales data, having begun the year with a 0.3 percent projection for the first quarter. 

As a result, the American dollar has been better bid right from the start of the current week. This is evident from EUR/USD’s drop from the high of 1.1324 seen on April 17 to a 22-month low of 1.1118 yesterday. Further, the dollar index, which tracks the value of the greenback against majors, has risen from 97.18 to an 11-month high of 98.32 over the last few days. 

Put simply, investors seem to have priced-in an above-forecast GDP reading. The data due at 12:30 GMT is expected to show the economy expanded at an annualized rate of 2.1 percent in the first quarter, having registered a growth rate of 2.2 percent in the preceding quarter. 

The EUR/USD pair could see a corrective bounce if the GDP fails to beat expectations by a big margin (Atlanta Fed’s GDPNow tracker sees growth rate at 2.7 percent). 

The common currency, however, may slide below 1.11 if the GDP prints above 3 percent. 

Technical Levels

    1. R3 1.1204
    2. R2 1.1184
    3. R1 1.1159
  1. PP 1.1138
    1. S1 1.1113
    2. S2 1.1093
    3. S3 1.1067

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Editors’ Picks

EUR/USD holds its ground amid mixed EU election results

EUR/USD is stable around 1.1200 amid mixed EU elections in which main parties lost ground to both centrist and extreme ones.  Trump said he hopes for a deal with China. Liquidity is thin due to a UK holiday.

EUR/USD News

GBP/USD falls on Brexit concerns, USD strength

GBP/USD has fallen below 1.2700 as markets digest the EU elections and see a growing chance of a hard Brexit after Farage's victory. The USD is gaining strength amid trade concerns. 

GBP/USD News

USD/JPY: bearish case firm as long as below 109.65

After closing the previous week in the negative territory, the USD/JPY pair staged a modest recovery but struggled to gather momentum amid thin trading volume on Monday. The pair was up 0.18% on a daily basis 109.48.

USD/JPY News

The Evolution of Three Issues are Key in the Week Ahead

As May winds down, the light economic calendar will allow investors to take their cues from the evolution of three disruptive forces--trade, Brexit and the US economy.  With actions against Huawei and possibly a handful of Chinese surveillance equipment producers, the US raised the stakes.

Read more

Gold: Set-up points to additional gains, move beyond $1287-89 supply zone awaited

Gold lacked any firm directional bias and seesawed between tepid gains/minor losses through the mid-European trading session on Monday. Technical set-up now seems to have turned in favor of bullish traders. 

Gold News

Editors' pick

EUR/USD holds its ground amid mixed EU election results

EUR/USD is stable around 1.1200 amid mixed EU elections in which main parties lost ground to both centrist and extreme ones.  Trump said he hopes for a deal with China. Liquidity is thin due to a UK holiday.

EUR/USD News

GBP/USD falls on Brexit concerns, USD strength

GBP/USD has fallen below 1.2700 as markets digest the EU elections and see a growing chance of a hard Brexit after Farage's victory. The USD is gaining strength amid trade concerns. 

GBP/USD News

USD/JPY: bearish case firm as long as below 109.65

After closing the previous week in the negative territory, the USD/JPY pair staged a modest recovery but struggled to gather momentum amid thin trading volume on Monday. The pair was up 0.18% on a daily basis 109.48.

USD/JPY News

The Evolution of Three Issues are Key in the Week Ahead

As May winds down, the light economic calendar will allow investors to take their cues from the evolution of three disruptive forces--trade, Brexit and the US economy.  With actions against Huawei and possibly a handful of Chinese surveillance equipment producers, the US raised the stakes.

Read more

Gold: Set-up points to additional gains, move beyond $1287-89 supply zone awaited

Gold lacked any firm directional bias and seesawed between tepid gains/minor losses through the mid-European trading session on Monday. Technical set-up now seems to have turned in favor of bullish traders. 

Gold News

eur/gbp

central banks

eur/usd

gbp/usd

usd/jpy

aud/usd

Signatures

bitcoin

ethereum

ripple


  •  
  •  
  •  
  •  
  •