EURUSD Down on Anticipated US GDP Release

Summary:
• The market is focussing on the impending release of US GDP figures, and EURUSD’s losses could pile up in the absence of euro-centric data.

EURUSD declined in early European trading session on Wednesday, as the market awaits US GDP figures. The pair traded at 1.0810, after losing -0.31% of its value at 9.04 am UTC.  The risk-off sentiment towards the pair is evidently driven by the perception that the US GDP reading for Q4 of 2023 will either meet or exceed forecasts. However, the dollar’s advances against the euro could be slowed down by falling US Treasury yields.

The United States GDP is projected to have grown by 3.3% in the fourth quarter of 2023. The quarter was characterized by a strong labour market and multiple forecast-beating macroeconomic growth indicators. This has buttressed the bullish sentiment around the dollar ahead of Wednesday’s release of the preliminary GDP data.

Market ignores weak US macro-data

The euro will be weighed down the lack of high-impact releases from the Eurozone. The momentum around ECB President Christine Lagarde’s statement on Tuesday has fizzled out. Furthermore, the market has shrugged off lower-than-expected US macroeconomic data released on Tuesday. Durable Goods Orders declined by -6.1% in January, fairing worse than the consensus estimate of -4.9%. Similarly, Consumer Confidence reading for February fell below projections (106.7 vs 114.8).

 Two Federal Open Market Committee (FOMC) members and one ECB Supervisory Board member are scheduled speak in after the release of GDP reading. Their speeches could provide fresh impetus for EURUSD. However, they could be subdued by the impact of the GDP reading if the reading diverts significantly from projection.  

Technical analysis

The EURUSD pair is currently under downward pressure, and the RSI signals control by the sellers. The pivot is at 1.0830, and the seller-controlled market will aim to bring the pair down to 1.0790 support.  If they succeed, their next target will likely be at the 1.0775 mark. However, if the momentum swings in favour of the buyers, they could push the price from the pivot to meet the first resistance at 1.0850. A move past that mark could be possible under extended bullish control. That will invalidate the bearish assessment, with the next resistance likely to come at 1.0865.