US Q2 GDP overview
Thursday's US economic docket highlights the release of the Advance Q2 GDP report, scheduled at 12:30 GMT. The preliminary number is expected to show that the world's largest economy collapsed by a record 34.1% annualize pace during the second quarter of 2020.
As Joseph Trevisani, Senior Analyst at FXStreet explains: “Shutting down the US economy in March and April as a response to the Covid pandemic has precipitated the most severe contraction in US GDP since the Depression of the 1930s and even that worldwide debacle took far longer to reach the same depths of unemployment and economic decline.”
How could it affect EUR/USD?
Given that markets might have already priced in the weaker reading, the report is unlikely to be a major game-changer for the US dollar. That said, any significant divergence from the expected figures might infuse some volatility and produce some meaningful trading opportunities around the EUR/USD pair.
Meanwhile, Yohay Elam, Analyst at FXStreet offered a brief technical outlook for the major and writes: “Momentum on the four-hour chart remains positive despite some softening, and the Relative Strength Index is below 70 – outside overbought conditions. Euro/dollar continues trading above the 50, 100, and 200 Simple Moving Averages, and it continues setting higher highs and higher lows – all bullish signs.”
Yohay further provided important technical levels to trade the pair: “Initial resistance awaits at 1.1780, a high point early in the week. It is followed by the new 22-month high of 1.1806. The next lines to watch are 1.1820 and 1.1850. Support is at 1.17, that cushioned EUR/USD this week, followed by 1.1625, which capped it last week. Further down, 1.1540 and 1.1505 are eyed.“
Key Notes:
• US Second Quarter GDP Preview: Are there any shocks left?
• EUR/USD Forecast: Showing its strength, and may surge to new highs in response to US GDP
• EUR/USD retreats from tops beyond 1.1800, focus on 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 the USD, while a low reading is negative.
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