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

US Q2 GDP Overview

Thursday's US economic docket highlights the release of the Preliminary GDP print for the second quarter, scheduled at 12:30 GMT. The first revision is expected to show that the world's largest economy contracted by 0.8% annualized pace during the April-June period as against the 0.9% decline estimated previously.

How Could it Affect EUR/USD?

The backwards-looking data might do little to push back against expectations for a further policy tightening by the Fed and fail to provide any meaningful impetus. That said, a downward revision will add to growing worries about a deeper economic global downturn and take its toll on the already weaker risk sentiment. This, in turn, should support the safe-haven greenback.

Conversely, a stronger-than-expected print should reaffirm hawkish Fed expectations and lift the US Treasury bond yields, along with the USD. Apart from this, concerns about an extreme energy crisis in Europe suggest that the path of least resistance for the EUR/USD pair is to the downside and any positive move runs the risk of fizzling out rather quickly.

Eren Sengezer, Editor at FXStreet, offered a brief technical outlook for the EUR/USD pair: “On the four-hour chart, the Relative Strength Index (RSI) indicator recovered to 50, suggesting that sellers refrain from committing to additional losses for the time being. Moreover, EUR/USD broke above the descending regression channel coming from August 12 and the last four-hour candles closed above the 20-period SMA, pointing to a bullish shift in the near-term outlook..”

Eren also outlined important levels to trade the EUR/USD pair: “In case the pair manages to hold above parity and starts using that level as support, 1.0020 (Fibonacci 23.6% retracement of the latest downtrend) aligns as immediate resistance ahead of 1.0060 (50-period SMA) and 1.0080 (Fibonacci 38.2% retracement).”

“On the downside, a four-hour close below parity could open the door for an extended slide toward 0.9960 (20-period SMA) and 0.9920 (end-point of the downtrend),” Eren added further.

Key Notes

   •  EUR/USD Forecast: Parity proves to be a tough resistance to crack

   •  EUR/USD could still weaken further – UOB

   •  EUR/USD: The risk is of a short squeeze all the way to 1.0135 – ING

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 equities, while a low reading is negative.