When is the Advance US Q2 GDP report and how could it affect EUR/USD?

US Q2 GDP Overview

Thursday's economic docket highlights the release of the Advance second-quarter US GDP report, at 12:30 GMT. Having contracted by 1.6% in the previous quarter, the world's largest economy is expected to return to growth and narrowly avoided a so-called 'technical' recession. GDP likely grew at a meagre 0.3% annualized pace during the April-June period, though some economists anticipate a drop in activity for the second successive quarter.

According to Valeria Bednarik, Chief Analyst at FXStreet, “Macroeconomic data points to heightened downward risks for the economy, particularly figures linked to the last half of the quarter, as spending retreated sharply.”

How Could it Affect EUR/USD?

Ahead of the key release, the US dollar stages a goodish rebound from its lowest level since July 6 touched earlier this Thursday. A stronger GDP print would be enough to reinforce expectations that the Fed would still hike 50 bps at each meeting in the remainder of this year. This would be enough to provide a fresh lift to the greenback and force the EUR/USD pair to prolong its intraday retracement slide from the 1.0235 region.

Conversely, a weaker reading would add to growing market worries about an economic downturn. This might continue to weigh on investors' sentiment and offer support to the safe-haven greenback. Apart from this, concerns about an energy crisis in the Eurozone suggest that the path of least resistance for the EUR/USD pair is to the downside.

Eren Sengezer, Editor FXStreet, outlined important technical levels to trade the EUR/USD pair: “The Fibonacci 38.2% retracement level of the latest downtrend forms strong resistance at 1.0230, which is also the upper limit of the 10-day-old trading range. With a four-hour close above that level, the pair could target 1.0300 (psychological level, Fibonacci 50% retracement) and 1.0320 (200-period SMA on the four-hour chart).”

“On the downside, 1.0200 (50-period SMA, psychological level) aligns as initial support before 1.0150 (Fibonacci 23.6% retracement, 100-period SMA) and 1.0100 (psychological level, static level),” Eren added further.

WANT TO DIRECT TALK TO OUR EXPERT TEXT NOW: MONEY LIFE RESEARCH

EUR/USD Price Analysis: Further consolidation appears in store

EUR/USD remains within a consolidative mood near 1.0250.

Extra side-lined trade appears favoured in the near term.

EUR/USD fades the initial pessimism and refocuses on the upper end of the recent range near 1.0260.

The current consolidative mood carries the potential to extend further, at least until the FOMC meeting due later in the week. The upside should remain limited by the weekly high around 1.0280, while the low-1.0100s are expected to hold the downside for the time being.

In the meantime, the pair is expected to remain under downside pressure while below the 5-month support line around 1.0490.

In the longer run, the pair’s bearish view is expected to prevail as long as it trades below the 200-day SMA at 1.0991.

Want to direct talk to our experts, Join now: MONEY LIFE RESEARCH

EUR/USD looks offered and drops to 3-day lows near 1.0660

EUR/USD loses further ground and revisits the 1.0660 region.

The greenback extends the bid bias despite lower yields.

Germany Construction PMI eased to 45.4 in May.

Sellers appear well in control of the sentiment around the European currency and drag EUR/USD back to the 1.0660 zone on Tuesday.

EUR/USD in multi-day lows

EUR/USD sheds ground for the third session in a row on Tuesday and pushes further south of the 1.0700 mark in the first half of the week, always in response to the selling pressure in the risk-associated universe.

Also reflecting the offered bias in the risk complex, US and German yields recede from recent tops, although they manage well to keep the trade in the upper end of the range.

In the domestic calendar, German Factory Orders contracted at a monthly 2.7% in April and the Construction PMI eased a tad to 45.4 in May. Across the Atlantic, Balance of Trade results and the Consumer Credit Change figures are due later in the NA session.

What to look for around EUR

EUR/USD continues to lose momentum and extends further the rejection from peaks beyond the 1.0700 mark in past sessions.

The pair’s recent multi-week recovery has been on the back of supportive ECB-speak, which continued to point at an initial rate hike as soon as in July, while the consensus view that the bond-purchase programme should end at some point in early Q3 has also lent legs to the European currency.

However, EUR/USD is still far away from exiting the woods and it is expected to remain at the mercy of dollar dynamics, geopolitical concerns and the Fed-ECB divergence, while higher German yields, persistent elevated inflation in the euro area and a decent pace of the economic recovery in the region are also supportive of an improvement in the mood around the euro.

Key events in the euro area this week: Germany Construction PMI (Tuesday) – Advanced EMU Q1 GDP Growth Rate (Wednesday) – ECB Interest Rate Decision (Thursday).

Eminent issues on the back boiler: Speculation of the start of the hiking cycle by the ECB as soon as this summer. Asymmetric economic recovery post-pandemic in the euro bloc. Impact of the war in Ukraine on the region’s growth prospects.

EUR/USD levels to watch

So far, spot is retreating 0.09% at 1.0686 and a breach of 1.0627 (monthly low June 1) would target 1.0532 (low May 20) en route to 1.0459 (low May 18). On the upside, the next resistance aligns at 1.0786 (monthly high May 30) seconded by 1.0936 (weekly high April 21) and finally 1.0945 (100-day SMA).

WANT TO DIRECT TALK OUR MARKET EXPERT CONTACT MONEY LIFE RESEARCH

GBP/USD rallies to near two-week high, eyeing 1.2500 ahead of US data/Fed's Powell

A combination of factors prompted aggressive short-covering around GBP/USD on Tuesday.

The British pound drew support from better-than-expected domestic employment figures.

A turnaround in the risk sentiment undermined the safe-haven USD and remained supportive.

Investors now eye the US Retail Sales for a fresh impetus ahead of Fed Chair Powell’s remarks.

The GBP/USD pair added to its strong intraday gains and shot to a nearly two-week high, around the 1.2480 region during the first half of the European session.

The British pound strengthened across the board on Tuesday after the UK Office for National Statistics reported that the number of people claiming unemployment-related benefits dropped by 56.9K in April. This was well below expectations for a fall by 38.8 and the 46.9K decline reported in the previous month. Adding to this, the ILO Unemployment Rate in the UK edged lower to 3.7% in three months to March from 3.8% prior.

Apart from this, the ongoing US dollar profit-taking slide from a two-decade high assisted the GBP/USD pair to build on its recent bounce from the 1.2155 region, or the lowest level since September 2020. Spot prices gained traction for the third successive day, taking along some short-term trading stops placed around the 1.2400 round-figure mark. The subsequent strength might have already set the stage for additional near-term gains.

That said, the UK-EU impasse over the Northern Ireland protocol could act as a headwind for sterling. UK Foreign Secretary Liz Truss will set out how the government plans to change the rules on goods moving between Britain and Northern Ireland and how it could override parts of the Brexit deal. Apart from this, the Bank of England's warning that the UK economy will slide into recession this year might cap gains for the GBP/USD pair.

Traders might also be reluctant to place aggressive bets and prefer to wait on the sidelines ahead of the key US macro data and Fed Chair Jerome Powell's appearance later this Tuesday. The US economic docket highlights the release of monthly Retail Sales figures. Meanwhile, Powell's remarks will be scrutinized for clues about the possibility of a 75 bps rate hike in June, which will influence the USD and provide a fresh impetus to the GBP/USD pair.

WANT TO DIRECT TALK OUR MARKET EXPERT CONTACT MONEY LIFE RESEARCH

Dollar Gains to Two-Year High on Safe Haven Flows

The U.S. dollar posted further gains in early European trade Wednesday, trading at two-year highs on safe haven flows as traders digested slowing global growth, raised geopolitical tensions, and the prospect of more tightening by the Federal Reserve.

At 3:15 AM ET (0715 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% higher at 102.532, the strongest it has been since March 2020 and on course for its best month since 2015.

Russia announced plans to halt gas flows to Poland and Bulgaria from Wednesday amid a standoff over fuel payments, to the benefit of the safe haven dollar.

Russian President Vladimir Putin has decreed that payment from “unfriendly” buyers should be in rubles, helping support his country’s beleaguered currency, while the European Union has responded that would be a breach of sanctions.

This escalation of tensions has added to the reasons traders have chosen to hold the dollar, with strict COVID-19 lockdown in China likely to hit economic growth in the world’s second largest economy while the Federal Reserve is expected to hike interest rates by 50 basis points in May as it seeks to combat inflation at a four-decade high.

EUR/USD fell 0.2% to 1.0618, dropping to a five-year low, amid fears for Europe's energy security, while the weak GfK German consumer confidence index, projected to plunge to a historic low in May, also weighed.

“April has been nasty for the euro, falling over 300 points. The Ukraine war and the hawkish Fed have been a toxic mix for the euro, as investors have dumped the currency and flocked to the safe-haven U.S. dollar,” said Kenny Fisher, an analyst at brokerage OANDA.

USD/JPY rose 0.5% to 127.81, not far removed from its recent 20-year low with the Bank of Japan set to meet overnight.

This central bank has maintained a very accommodative monetary stance, in direct contrast to the hawkish Federal Reserve, but traders see the risk of policy changes to try and arrest the currency's recent weakness.

GBP/USD edged higher to 1.2577, falling to a fresh 21-month low as last week’s weak retail sales data prompted a rethink of the Bank of England’s tightening cycle.

“Tightening expectations for the 5 May BoE meeting have dropped backed to 29bp from 38bp early last week,” said analysts at ING, in a note.

USD/CNY edged lower to 6.5555, with the yuan helped by data showing Chinese industrial profit growth quickened in March, while AUD/USD rose 0.5% to 0.7159 after Australian consumer prices surged at their fastest annual pace in two decades, spurring rate hike speculation.

WANT TO DIRECT TALK OUR MARKET EXPERT ?

CONTACT: MONEY LIFE RESEARCH

EUR/USD Price Analysis: Next target appears at 1.1000

EUR/USD extends the rebound to the 1.0940 region.

A move to the 1.1000 hurdle should not be ruled out.

EUR/USD’s upside momentum picks up extra pace beyond the 1.0900 yardstick on Thursday.

Further advance appears in store for the pair in the very near term with the immediate hurdle now at the psychological 1.0000 barrier. The surpass of the latter should put a test of the 55-day SMA, today at 1.1077, back on the radar.

While below the 200-day SMA, today at 1.1415, the outlook for the pair is expected to remain negative.

EUR/USD daily chart

WANT TO DIRECT TALK OUR MARKET EXPERT CONTACT MONEY LIFE RESEARCH

EUR/USD Price Analysis: Extra pullbacks seen below 1.080

EUR/USD fades the pre-ECB uptick to the 1.0920 zone on Thursday.

Recent lows around 1.0800 emerge as the next contention area.

In light of the ongoing price action, extra losses in the pair remain in the pipeline in the short-term horizon. Against that, a break below the so far monthly low at 1.0808 (April 14 should pave the way for a quick visit to the 2022 low at 1.0805 (March 7) before the May 2020 low at 1.0766 (May 7).

While below the 200-day SMA, today at 1.1440, the outlook for the pair is expected to remain negative. 

Get 90% Accurate signals with proper risk management
REGISTER NOW: MONEY LIFE RESEARCH

GBP/JPY sticks to strong gains near two-and-half-week high, around 164.00 mark

GBP/JPY regained traction on Wednesday and was supported by a combination of factors.

Dovish remarks by BoJ’s Kuroda and the risk-on impulse weighed on the safe-haven JPY.

Hot UK consumer inflation figures underpinned sterling and provided an additional boost.

The GBP/JPY cross maintained its strong bid tone through the first half of the European session and was last seen trading near a two-and-half-week high, around the 164.00 mark.

Following the previous day's modest pullback, the GBP/JPY cross caught fresh bids on Wednesday and was supported by a combination of factors. The Japanese yen weakened across the board after the Bank of Japan Governor Haruhiko Kuroda reiterated to sustain the current powerful monetary easing to support economic recovery. Apart from this, the risk-on impulse - as depicted by a positive tone around the equity markets - undermined traditional safe-haven assets, including the JPY.

On the other hand, the British pound drew some support from hotter-than-expected UK consumer inflation figures. In fact, the UK Office for National Statistics reported that headline CPI jumped from 6.2% YoY in the previous month to 7% in March - the highest level since 1992. Adding to this, the Core CPI, which excludes volatile food and energy prices, rose to 5.7% YoY from the 5.2% reported in February. This was seen as another factor that provided an additional lift to the GBP/JPY cross.

With the latest leg up, spot prices have rallied nearly 150 pips from the weekly low, around the 161.60 region touched on Monday. Expectations that the BoJ will stick to its accommodative monetary policy stance should continue to act as a headwind for the JPY and supports prospects for a further near-term appreciating move for the GBP/JPY cross. Hence, a subsequent move back towards challenging the multi-year high, around the 164.65 region touched in March, remains a distinct possibility.

Want to direct talk with our expert

VISIT NOW: MONEY LIFE RESEARCH

Dollar riding high after index hits 100 for first time in nearly two years

The U.S. dollar index strengthened to 100 for the first time in nearly two years on Friday, supported by the prospect of a more aggressive pace of Federal Reserve interest rate hikes.

The greenback has gained ground on a basket of rivals over the past month, particularly against the euro, which has been pressured by investor concerns about the economic costs of war in Ukraine and a potentially nail-biting election in France.

The dollar index rose as high as 100 in early European trading hours, its best level since May 2020. It later lost some momentum and was last broadly flat at 99.844.

The index is up 1.3% this week, which would be its biggest increase in a month, backed by hawkish remarks from several Federal Reserve policy makers who are calling for a faster pace of interest rate increases to curb rapid inflation.

This week's release of the minutes of the Fed's March meeting showed "many" participants were prepared to raise interest rates in 50-basis-point increments in coming months.

On the other side of the dollar's rally, the euro dropped to a new one-month low of $1.0848. It later recovered and was last broadly flat on the day at $1.08770.

Meeting minutes from the European Central Bank published on Thursday suggested its policy makers are keen to act to combat inflation, but the eurozone has so far taken a more cautious tack than other central banks, weakening the euro.

A tightening election race in France between president Emmanuel Macron and far-right candidate Marine Le Pen has added to pressure on the euro, raising investor concerns about the future direction of the euro zone's second-biggest economy, though Macron is still ahead in polls.

"The upcoming French presidential election, with the first round on Sunday, is also adding to current negative EUR sentiment," currency analysts at MUFG said in a note.

The dollar extended its gains against the Japanese yen, hitting 124.23, its highest in over a week and approaching last month's near seven-year high of 125.1.

The yen has steadied this month after tumbling in March, but remains under pressure as the U.S. raises interest rates and the Bank of Japan intervenes in the bond market to keep rates low.

Sterling lost ground versus the dollar, and was last down a quarter of a percent at $1.30400.

In cryptocurrency markets, bitcoin was broadly unchanged at $43,430.

WANT TO DIRECT TALK OUR MARKET EXPERT CONTACT : MONEY LIFE RESEARCH

GBP/JPY consolidates in a range around 162.00 mark, downside remains cushioned

GBP/JPY struggled to capitalize on its modest intraday gains back closer to over a one-week high.

The cautious market mood underpinned the safe-haven JPY and capped the upside for the cross.

Subdued USD demand benefitted the GBP and extended some support, at least for the time being.

The GBP/JPY cross surrendered its modest intraday gains and was last seen trading in the neutral territory, around the 161.80-161.75 region.

The cross attracted some dip-buying near the 161.40 area on Thursday and climbed back closer to over a one-week high touched the previous day, though the uptick lacked bullish conviction. The European equity markets recovered from the overnight selloff, which undermined the safe-haven Japanese yen and extended some support to the GBP/JPY cross.

Apart from this, comments from Bank of Japan board member Asahi Noguchi, saying that the central bank must stick to its ultra-easy policy despite rising inflationary pressures, also weighed on the JPY. On the other hand, some cross-driven strength stemming from the fall in the EUR/GBP cross benefitted sterling amid subdued US dollar price action.

The combination of factors did provide an intraday lift to the GBP/JPY cross, through the prevalent cautious market mood kept a lid on any meaningful upside, at least for the time being. The market sentiment remains fragile amid fading hopes for a diplomatic solution to end the war in Ukraine and the prospect of more Western sanctions on Russia.

Hence, the focus will remain on new developments surrounding the Russia-Ukraine saga amid absent relevant market moving economic releases from the UK on Thursday. The incoming geopolitical headlines would influence the risk sentiment, which, in turn, will drive demand for safe-haven assets, including the JPY, and provide impetus to the GBP/JPY cross.

WANT TO DIRECT TALK OUR MARKET EXPERT CONTACT: MONEY LIFE RESEARCH