When is the US GDP report and how could it affect EUR/USD?
US Q4 GDP Overview
Thursday's US economic docket highlights the release of the Advance GDP report for the fourth quarter, scheduled at 13:30 GMT. The preliminary number is expected to show that the world's largest economy expanded by 3.9% annualized pace during the October-December period. This would signal that the growth momentum lost considerable speed from a robust rebound of 33.4% recorded in the previous quarter.
How Could it Affect EUR/USD?
Ahead of the key release, the US dollar remained well supported by the global flight to safety amid the prevalent cautious mood around the global equity markets. This, along with the ECB jawboning on the recent euro strength, led to a softer tone surrounding the EUR/USD pair through the mid-European session.
A weaker-than-expected reading would further fuel worries about the potential economic fallout from the coronavirus pending and further dent the already weaker risk sentiment. This, in turn, might provide an additional boost to the greenback.
Conversely, the market reaction to a stronger print is more likely to remain limited amid doubts about the timing and size of a new US economic stimulus package. Hence, the path of least resistance for the pair is to the downside.
EUR/USD Technical Outlook
Meanwhile, Yohay Elam, Analyst at FXStreet offered a brief technical outlook for the major and writes: “Euro/dollar has decisively dropped below the 50 and 100 Simple Moving Average on the four-hour chart and is suffering from downside momentum. Moreover, the Relative Strength Index is still above 30 – outside oversold conditions.”
Yohay further provided important technical levels to trade the pair: “Bears are eyeing 1.2080, the daily low, as their first target. Critical support is at 1.2060, Wednesday's swing low and just above the 2021 trough of 1.2055. This near-perfect double-bottom is critical support. The next level to watch is 1.20. Looking up, some resistance awaits at 1.2130, which is where the 50 SMA hits the price, followed by 1.2160 and then by 1.2190 – the latter being a strong cap.”
Key Notes:
• US Fourth Quarter GDP Preview: Variety is the spice of markets
• EUR/USD Forecast: Five reasons to big break below critical support at 1.2060/
• EUR/USD Price Analysis: Forms head-and-shoulders pattern
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.