EUR/USD darts higher as after weaker US Q3 GDP data
- The EUR/USD pair rose today after the second estimate of the US Q3 GDP data.
- The economy jumped by 33.1% in the third quarter, lower than than the estimated 33.2%.
- Initial jobless claims rose by 778,000 last week an increase from the previous 748,000.
The EUR/USD price continued rallying today after mixed economic data from the United States. The pair is trading at 1.1910, which is almost 1% above this week’s low of 1.1800.
US Q3 GDP data
The US economy expanded by 33.1% in the third quarter, according to the second reading by the Bureau of Economic Analysis. That was unchanged from what the bureau released last month but lower than the median estimate of analysts polled by Bloomberg.
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According to the bureau private consumption, which is the biggest constituent of the GDP, increased by 3.3%. Corporate profits increased to $495 billion after falling by $209 billion in the second quarter. Other components of the GDP like government spending, exports, and capital goods investments also rose in Q3.
Still, the challenge for the US economy is that analysts are predicting a sharp reversal in the fourth quarter. That’s because the number of Covid-19 cases has continued to break records leading to fresh lockdowns by several states.
Evidence of these lockdowns became visible today after the Bureau of Labour Statistics (BLS) released the initial jobless claims data. More than 778k people filed for initial claims last week. That was a higher figure than the median estimate of 730k and the previous week’s decline of 748k. It was also the second consecutive week that the number has risen.
Further data showed that durable goods orders declined at the start of the quarter. The headline durable goods orders rose by 1.3% in October, lower than the increase of 2.1% in September. The core goods orders also fell to 1.3% from 1.5%.
Meanwhile, the EUR/USD is rising because of the overall weaker US dollar. The dollar index is down by 0.10% today because of reduced risk in the market because a Covid vaccine is on its way and Donald Trump has “conceded.” Later today, the pair will react to the new home sales data and the personal consumption and expenditure data.
EUR/USD technical outlook
On the daily chart, we see that the EUR/USD rose from the double bottom low of 1.1610 to today’s high of 1.1930 as the risk-on sentiment pulled forex traders away from the dollar. The pair is slightly above the middle line of the Bollinger bands, which is an important support level. It is also slightly below the important resistance level at 1.200. Therefore, the pair will likely continue rising as bulls attempt to move above 1.1200.