US Q1 GDP Overview
Thursday's US economic docket highlights the release of the Advance GDP report for the first quarter, scheduled at 12:30 GMT. The first estimate is expected to show that growth in the world's largest economy accelerated by a robust 6.5% annualized pace during the January-March period, fueled by a massive government fiscal stimulus and a surge in consumer spending.
As Eren Sengezer, Editor at FXStreet writes: “it’s not going to be a big surprise to see that the US economy continued to fire on all cylinders despite adverse weather conditions in the first quarter of 2021.”
How Could it Affect EUR/USD?
Ahead of the key release, a goodish pickup in the US Treasury bond yields assisted the US dollar to stage a modest bounce from two-month tops. That said, the market has been pricing in a relatively faster US economic recovery from the pandemic. Hence, mostly in line reading is unlikely to impress the USD bulls. Moreover, the Fed Fed remains firm to maintain the current accommodative monetary policy stance deeper into the recovery. This further suggests that the path of least resistance for the greenback remains to the downside, which should allow the EUR/USD pair to prolong its recent bullish momentum witnessed since the beginning of this month.
Meanwhile, Yohay Elam, Analyst at FXStreet offered a brief technical outlook for the major: “Euro/dollar is trending higher since bottoming out early in April. It has recently been trading above an uptrend support line that follows the 50 Simple Moving Average. Momentum remains to the upside and the Relative Strength Index (RSI) is below 70 – thus outside overbought conditions. Overall, bulls are in the driver's seat.”
Yohay further provided important technical levels to trade the pair: “The fresh April high of 1.2150 is the immediate resistance line. It is followed by 1.2180 and 1.2240, levels last seen in February. Support awaits at 1.2117, the previous April peak, and then by 1.2080, 1.2050 and 1.20, all stepping stones on the way up.”
Key Notes:
• US Q1 GDP Preview: Eyes on inflation and FOMC as economic recovery gathers steam
• EUR/USD Forecast: Two steps up, now one step down? US GDP critical after the Fed
• EUR/USD Price Analysis: Room for extra gains near-term
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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