Dollar Outlook: Q4 GDP; Focus on EUR/USD, USD/JPY, GBP/USD

Explore the U.S. Dollar Q4 GDP impact, closely tracking EUR/USD, USD/JPY, and GBP/USD trends for crucial market insights.

In a surprising turn of events, the U.S. dollar faced a setback on Wednesday despite positive U.S. economic indicators. However, market analysts suggest a potential reversal in its fortunes in the coming days, contingent upon the continued positivity of crucial U.S. economic data. The spotlight is now on the eagerly awaited fourth-quarter U.S. Gross Domestic Product (GDP) report. On Thursday, the economic community eagerly awaits releasing the fourth-quarter U.S. Gross Domestic Product (GDP) report.

Economic experts anticipate a 2% expansion at an annualized rate for the fourth quarter, following a robust 4.9% increase in Q3. Although GDP figures are retrospective, they remain a vital gauge of economic health. Advisors recommend that traders closely monitor the report, focusing on household expenditures, which represent a primary driver of economic growth.

With consumer spending defying expectations, supported by a robust labor market and increased confidence levels, another robust GDP report could further diminish the likelihood of a Federal Reserve rate cut in March. This may prompt traders to revise their dovish expectations for the Federal Open Market Committee’s (FOMC) policy trajectory, creating a more favorable environment for the U.S. dollar.

U.S. Dollar Outlook: Q4 GDP; Focus on EUR/USD, USD/JPY, GBP/USD

EUR/USD Technical Analysis

Following a relatively subdued performance earlier in the week, the EUR/USD pair rebounded on Wednesday, finding support at the 200-day simple moving average and approaching the 1.0900 mark. Potential resistance levels lie at 1.0920/1.0935 and 1.0975, with a further upward trajectory targeting 1.1020.

Conversely, a shift in sentiment favoring sellers could cause a downward turn. The 200-day SMA near 1.0840 would be the initial defense against bearish pressure. If a breakdown occurs, the analysis identifies support levels at 1.0770 and 1.0710 at trendline support.

GBP/USD Technical Analysis

GBP/USD also moved upward on Wednesday but struggled to surpass the resistance at 1.2770. Market participants should closely monitor this technical ceiling, as a failure to breach it may signal a potential pullback toward the 1.2680 level. Additionally, further losses could direct attention to the 1.2600 level.

Conversely, a decisive breach of 1.2770 could confirm a bullish signal, with GBP/USD potentially rallying towards 1.2830 before extending its upward trend to 1.3000, supported by confirming a symmetrical triangle pattern.

USD/JPY Technical Analysis

USD/JPY experienced a sell-off on Wednesday but concluded the day above the 100-day simple moving average near 147.40. The possibility of stability in this zone is acknowledged, but a breakdown might lead to a retracement towards the 146.00 handle.

A bullish resurgence anticipates technical resistance at 149.00, with further scrutiny directed towards the psychological 150.00 mark. However, traders should exercise caution in light of these factors, as the potential for Tokyo to intervene in FX markets and bolster the yen may limit the sustainability of these levels.

With the release of the fourth-quarter U.S. GDP report imminent, market participants stand on edge, closely observing the unfolding dynamics in the EUR/USD, USD/JPY, and GBP/USD pairs.

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