The EUR/USD failed to continue its early-day strong bids and dropped below the mid-1.1800 level. However, the reason for the losses in currency pair could also be attributed to the broad-based US dollar renewed strength ahead of the US Q2 GDP data. The currency pair climbed 0.65% on Wednesday as the Federal Reserve showed concerns about the health of the US labor market and sounded dovish on interest rates, which initially weighed on the US dollar and contributed to the currency pair early-day gains.
Moving on, the currency pair may face further deeper losses if Germany reports a bigger-than-expected economic contraction in the second quarter on the day. However, the upbeat comments of (ECB) Governing Council member and Bank of France Head Francois Villeroy de Galhau about French economic outlook capped further losses in the currency pair, at least for now. At the moment, the EUR/USD currency pair is currently trading at 1.1762 and consolidating in the range between1.1746 - 1.1795. However, the currency pair buyers seemed cautious to place any strong position ahead of the German Preliminary Q2 GDP and US Q2 GDP data.
The German Gross Domestic Product (GDP) is scheduled to release at 08:00 GMT. It is anticipated to show the economy contracted -9.0% quarter-on-quarter in April to June (Q2) period, as we know this was contracted by 2.2% in the first quarter. Whereas, the annualized GDP is forecasted to print at -10.9% in Q2 against the previous quarter's reading of -1.9%.
As a result of the bigger-than-expected drop in the GDP reading, the shared currency will likely face bearish pressures. However, the losses could be short-lived or limited in the wake of upbeat German manufacturing sector report this month.
The reason behind the limited looses could also be attributed to the renewed concerns regarding the future course of the US economy. However, the broad-based US dollar could face another selling bias if the second-quarter GDP, scheduled for release at 12:30 GMT, prints below estimates, confirming Federal Reserve's dovish stance. As we all know, the Fed kept interest rates unchanged on Wednesday while indicating the slowing pace of recovery amid the resurgence of coronavirus cases. So, the low-interests caused the weak US dollar, which was supporting the currency pair.
Despite this, the broad-based US dollar succeeded in erased its long-day losses. It recovered slightly, at least for now, possibly due to the risk-off market sentiment underpinning the US dollar as a safe-haven currency ahead of US Q2 GDP data. However, the US dollar gains will likely be short-lived or temporary amid the worries that the economic recovery in the US could be stopped in the wake of the resurgence in coronavirus cases. However, the gains in the US dollar kept the EUR/USD currency pair under pressure. Looking forward, the market players will keep their eyes on critical US Q2 Preliminary GDP report and German Preliminary Q2 GDP for fresh trading impetus on the pair.
Daily Support and Resistance
Pivot Point 1.1721
On Thursday, the technical outlook of the EUR/USD continues to be bearish as it's trading at 1.1750 level, consolidating above resistance become a support mark of 1.1705. On the hourly chart, the EUR/USD continues to form a higher high and higher low pattern proposing chances of bullish trend continuation. Conversely, a bearish violation of 1.1755 can spur more selling unto 1.1702 level. Consider staying bearish below 1.1780 level today until 1.1720, which marks the intraday pivot point for the EUR/USD. Good luck!