The advance U.S. 4Q Gross Domestic Product (GDP) report may generate a
larger rebound in EUR/USD should the fresh batch of data highlight a
slowing recovery in the world’s largest economy.
What’s Expected:
Why Is This Event Important:
Even though the Federal Open Market Committee (FOMC) is widely expected to raise the benchmark interest rate in mid-2015, a dismal GDP print may push the central bank to further delay its normalization cycle especially as it struggles to achieve the 2% target for inflation.
Nevertheless, improved confidence along with the ongoing recovery in the
labor market may prompt a strong GDP figure, and a positive development
may promote a further decline in EUR/USD amid the deviation in the
policy outlook.
How To Trade This Event Risk
Bearish USD Trade: 4Q GDP Fails to Meet Market Expectations
- Need to see green, five-minute candle following the GDP report to consider a long trade on EURUSD
- If market reaction favors a short dollar trade, buy EURUSD with two separate position
- Set stop at the near-by swing low/reasonable distance from entry; look for at least 1:1 risk-to-reward
- Move stop to entry on remaining position once initial target is hit; set reasonable limit
- Need red, five-minute candle to favor a short EURUSD trade
- Implement same setup as the bearish dollar trade, just in reverse
EUR/USD Daily
- Keeping a close eye on the RSI as it continues to flirt with the 30 level; rebound from oversold territory to favor a larger rebound for EUR/USD.
- Interim Resistance: 1.1440 (23.6% retracement) to 1.1470 (78.6% expansion)
- Interim Support: 1.1096 (January low) to 1.1100 pivot
| Period | Data Released | Estimate | Actual | Pips Change (1 Hour post event ) | Pips Change (End of Day post event) |
|---|---|---|---|---|---|
| 3Q A 2014 |
10/30/2014 12:30 GMT | 3.0% | 3.5% | +12 | +19 |
3Q 2014 U.S. Gross Domestic Product (GDP)
EURUSD M5: 36 pips price movement by USD - GDP news event :
The U.S. economy advanced more-than-expected in the third-quarter, with the growth rate expanding another annualized 3.5% following the 4.6% expansion during the three-months through June. At the same time, Personal Consumption climbed 1.8% during the same period amid forecasts for a 1.9% print, while the core Personal Consumption Expenditure (PCE) narrowed to 1.4% from 2.0% in the second-quarter. Despite the better-than-expected GDP print, the Fed appears to be in no rush to normalize monetary policy as it struggles to achieve the 2% target for inflation. The initial reaction in EUR/USD was short-lived as the pair snapped back from the 1.2550 region, with the pair ending the day at 1.2602.
