EUR/USD: Key Levels to Watch Ahead of US GDP Data

Summary:

EUR/USD is rallying as investors digest the Fed interest rate decision. On Thursday, focus is on the US GDP and Germany's unemployment numbers.

EUR/USD is rallying as investors digest Wednesday’s Fed interest rate decision. The US central bank maintained a dovish tone as it insisted that it would continue with its aggressive monetary policy. Subsequently, the benchmark 10-year US bond yields dropped from an intraday high of 1.65 to 1.60. The dollar index, which tracks the value of the greenback against a basket of currencies, fell to 90.42 after reaching a high of 91.13 earlier on Wednesday.

In today’s session, EUR/USD will be reacting to Germany’s unemployment numbers. The number of unemployed individuals in Europe’s largest economy is expected to have declined by 10,000 in April compared to the previous month’s decline of 8,000. Besides, the first preliminary reading of the US GDP for Q1’21 will offer cues to the currency pair. The expected 6.1% is higher than 4.3% in Q4’20.

EURUSD Technical Outlook

On Wednesday, EUR/USD rallied as investors expected a dovish tone from the Federal Reserve. With the central bank maintaining that it would continue with the aggressive monetary support, the pair rose to Thursday’s intraday high of 1.2150. This is the first time that the pair has reached that level since 26^th February. However, it has since pulled back to the current 1.2126.

On an hourly chart, EUR/USD is trading above the 25 and 50-day exponential moving averages. It is likely to find support at 1.2109 as the dollar tries to recoup some of its losses. However, the bull will remain in control ahead of the US GDP. With 1.2150 being a key resistance level, the pair will probably remain range-bound between 1.2150 and 1.2100 in the ensuing sessions. This thesis will be invalid if it moves below the range’s lower limit.