The EURUSD currency pair has posted one of the strong recovery rallies in just a few weeks, taking the currency pair from being one of the weakest to the strongest. Price action extended gains all the way from 1.0870 through 1.1250 before easing back lower.
The strong gains in the EURUSD can be partly attributed to receding political risks from the eurozone, following the favorable election results from both the Netherlands and France.
The economic recovery also seems to be firmly entrenched with both inflation and growth seen rising steadily in the past few months. Economic forecasts from various institutes also expect the pace of growth to be sustained in the coming months.
The data has been fairly supportive of the EURUSD. Market participants are expecting the European Central Bank to start tapering its bond purchases even further, or to signal raising interest rates. The ECB has dismissed the rumors, but officials have acknowledged that there is indeed a pickup in the Eurozone’s recovery.
All the positive factors combined alongside a weak patch of data from the US and the uncertainty from the Trump administration led to a strong gain in EURUSD just a week after the French election results.
US macroeconomic data to shape course for EURUSD
Coming up later in the day will be the second revision to the first quarter GDP from the US which was reported at 0.7%. It was the slowest pace of increase since 2014 on a quarterly basis.
Economists are optimistic that the initial GDP numbers will be revised today, showing first quarter GDP growth slightly higher at 0.9%.
Growth slowed as consumer spending declined with the US GDP growth tracking around 2% on average. President Trump has promised a GDP growth of around 4%, which was last seen in the late 1990’s.
Fed officials have maintained that the U.S. will experience a GDP growth of around 2% over the next few years.
Despite the average pace of GDP growth, the Fed has signaled intentions to move ahead with two more rate hikes this year. The next rate hike is expected to come in June.
Read full report: https://www.orbex.com/blog/2017/05/can-eurusd-breakout-1-1250-us-gdp-revision/