The US GDP (advanced) report will be released in about an hour from now. The expected reading is 2.1%, which is the same as the previous number, which was revised upwards to 2.1%.
If the results meet expectations, this will equate to a moderate increase of 2.3% on an annualized basis, which is less than the 2018 reading of 2.5% year-over-year. Such a scenario may set the stage for slower growth and could be a major campaign point for US elections expected to hold in November this year.
Analysts would be watching to see the impact that the US-China trade war has had on American companies who rely on Chinese imports for manufacturing, as well as the effects that Boeing’s troubles have had on the economy.
The tradable deviation is 0.0%, which is the difference between the previous number and the consensus number. Therefore, a reading of 2.2% or higher will be deemed as USD-positive, which could push the EURUSD lower. A reading of 2.0% or lower will b perceived as being unfavourable for the US Dollar, and this will allow the EURUSD to catch a breather from the bearish actions that have affected this pair for more than a week now.
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Technical Outlook for EURUSD
The EURUSD is on the verge of completing the measured move, which followed the breakdown of the rising wedge pattern. This measured move is a continuation of the long-term downtrend on the pair.
Price action has bounced off the 1.09932 support level identified in previous analyses of this pair. Therefore, an upbeat GDP number may be required to breach this support level. If this is the case, then a 3% penetration close on the weekly candle should be sought. Alternatively, two successive penetration candles that close below this support level on the daily chart should suffice to filter the move. If this condition is fulfilled, then we can expect to see the EURUSD continue the slide towards 1.09412.
Failure to break this support level could be a consequence of a weak US GDP report. A bounce of support could allow the price to recover to 1.10630, and possibly 1.11023 if the numbers are good enough to enable sellers to exit the fray.
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