When is the US GDP report and how could it affect EUR/USD?

US Q1 GDP Overview

Thursday's economic docket highlights the release of the Advance first-quarter US GDP report, or the first estimate, scheduled at 12:30 GMT. Growth in the world's largest economy is expected to have decelerated sharply from the 6.9% rise recorded in the last quarter of 2021 to a 1.1% annualized pace during the January-March period. This would mark the slowest rate since mid-2020, suggesting that lingering supply chain constraints, inflation, and disruptions led by Russia's war in Ukraine weighed on growth.

Given that the Fed looks more at inflation than growth, investors also will keep a close eye on the GDP Price Index. The gauge is expected to edge higher to 7.3% during the first quarter from the 7.1% previous. As Yohay Elam, FXStreet's own Analyst explains: “Even if this is a relative deceleration, a level above 7% still implies high inflation. In turn, this publication serves as a reminder for investors that the Federal Reserve is set to raise interest rates at a rapid pace.”

How Could it Affect EUR/USD?

Heading into the key release, sustained US dollar buying dragged the EUR/USD pair to its lowest level since January 2017, below the 1.0500 psychological mark. Stronger growth figures would be enough to provide a fresh lift to the greenback and pave the way for a further near-term depreciating move for the major. Conversely, any disappointment is more likely to be overshadowed by concerns about a brewing energy crisis in Europe. This should continue to act as a headwind for the shared currency, suggesting that the path of least resistance for the pair is to the downside.

Eren Sengezer, Editor FXStreet, outlined important technical levels to trade the EUR/USD pair: “The one-week-old descending trend line forms the initial resistance at 1.0600. In case the pair rises above that level and starts using it as support, it could target 1.0650 (20-period SMA) and 1.0700 (psychological level, static level) next.”

“On the downside, the first support is located at 1.0500 (psychological level, static level) before 1.0460 (static level) 1.0400 (psychological level),” Eren added further.

Key Notes

   •  US GDP Preview: Three reasons to expect dollar-boosting figures

   •  EUR/USD Forecast: Bulls looking out for overdue dollar correction

   •  Forex Today: Relentless dollar buying continues ahead of US GDP

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 the USD, while a low reading is negative.