Lackluster U.S. GDP to Keep EUR/USD Rate Afloat

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Trading the News: U.S. Gross Domestic Product (GDP)

Updates to the 2Q U.S. Gross Domestic Product (GDP) report might produce headwinds for the greenback as the expansion fee is now anticipated to improve 4.0% versus an preliminary forecast for a 4.1% print.

A marked downward revision within the GDP determine might influence the financial coverage outlook as indicators of a much less strong economic system rattles bets for an prolonged hiking-cycle, and Chairman Jerome Powell & Co. might proceed to venture a impartial Fed Funds fee of 2.75% to 3.00% as measures for inflation present ‘no clear signal of an acceleration above 2 p.c.’

With that mentioned, the Federal Open Market Committee (FOMC) might ship a dovish rate-hike on the subsequent quarterly assembly in September, however a optimistic growth might preserve the Fed on observe to implement 4 rate-hikes in 2018 because the central financial institution largely achieves its twin mandate for full-employment and worth stability. Sign up and join DailyFX Currency Analyst David Song LIVE for a chance to focus on potential commerce setups.

Impact that the U.S. GDP report has had on EUR/USD in the course of the earlier quarter

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour submit occasion )

Pips Change

(End of Day submit occasion)

1Q P

2018

05/30/2018 12:30:00 GMT

2.3%

2.2%

-7

+29

Preliminary 1Q 2018 U.S. Gross Domestic Product (GDP)

EUR/USD 10-Minute Chart

Image of eurusd 5-minute chart

Adjustments to the 1Q U.S. Gross Domestic Product (GDP) report confirmed the economic system rising 2.2% versus an preliminary forecast of 2.3%, with the core Personal Consumption Expenditure (PCE), the Fed’s most popular gauge for inflation, highlighting related dynamic because the index narrowed to 2.3% from 2.5%. The measure for Personal Consumption additionally failed to meet market expectations because the determine printed at 1.0% amid projections for a 1.2% clip.

Nevertheless, the revisions sparked a restricted response in EUR/USD, with the alternate fee appreciating in the course of the North American commerce to shut the day at 1.1661. Review the DailyFX Advanced Guide for Trading the News to study our 8 step technique.

EUR/USD Daily Chart

Image of eurusd daily chart

  • There seems to be a broader shift in EUR/USD conduct as each worth and the Relative Strength Index (RSI) get away the bearish tendencies from earlier this 12 months, and the rebound from the 2018-low (1.1301) might proceed to collect tempo because the alternate fee snap the month-to-month opening vary.
  • The shut above 1.1640 (23.6% growth) to 1.1680 (50% retracement) area increase the chance for a transfer again in direction of 1.1810 (61.8% retracement), which largely traces up with the July-high (1.1791), with the subsequent area of curiosity is available in round 1.1960 (38.2% retracement) to 1.1970 (23.6% growth).

For extra in-depth evaluation, try the Q3 Forecast for EUR/USD

Additional Trading Resources

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— Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.

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