US Q1 GDP Overview

Thursday's US economic docket highlights the release of the Preliminary GDP print for the first quarter, scheduled at 12:30 GMT. The second estimate is expected to show that growth in the world's largest economy contracted by 1.4% annualized pace during the January-March period as against the advance estimate pointing to a 1.4% decline.

How Could it Affect EUR/USD?

The backwards-looking data is unlikely to provide any meaningful impetus amid the worsening outlook for the global economy. Moreover, the markets have fully priced in a 50 bps at the next two FOMC meetings, suggesting that any reaction to the data is more likely to be short-lived. That said, a significant divergence from the expected numbers might still infuse some volatility, which, in turn, should influence the USD price dynamics and produce short-term trading opportunities around the EUR/USD pair.

Eren Sengezer, Editor at FXStreet, offered a brief technical outlook for the major: “EUR/USD is likely to continue to fluctuate within the 1.0740 (the end of the latest uptrend)-1.0630 (200-period SMA on the four-hour chart) range in the near term. The next significant action could be triggered once the pair breaks out of this channel..”

Eren also outlined important levels to trade the EUR/USD pair: “With a drop below 1.0630, EUR/USD could push lower toward 1.0600 (Fibonacci 38.2% retracement) and 1.0570 (50-period SMA). On the flip side, 1.0700 (psychological level) aligns as interim resistance ahead of 1.0740. A daily close above the latter could be seen as a significant bullish development and open the door for additional gains toward 1.0800 (psychological level).”

Key Notes

   •  EUR/USD Forecast: Key levels for next breakout defined

   •  EUR/USD regains composure and retargets 1.0700

   •  EUR/USD could quite easily see move back towards the 1.0550/1.0500 zone – ING

About US GDP

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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