The United States Bureau of Economic Analysis (BEA) is set to release its preliminary estimate of first-quarter Gross Domestic Product (GDP) on Thursday, with analysts expecting an annualized growth rate of 2.3%, a significant rebound from the 0.5% expansion recorded in the final quarter of 2024 [1]. The Atlanta Fed’s GDPNow model, as of April 21, forecasts a 1.2% expansion for Q1 GDP, slightly down from 1.3% on April 9 [1]. This release is highly anticipated by investors, as it includes not only headline GDP but also the GDP Price Index and Personal Consumption Expenditures (PCE) data, the latter being the Federal Reserve’s preferred inflation gauge [1]. The data comes after the Federal Reserve’s April 28-29 meeting, where the Committee kept the Fed Funds Target Range unchanged [1].
Simultaneously, Eurostat will publish the preliminary Eurozone Harmonized Index of Consumer Prices (HICP) for April and Q1 GDP data on Thursday at 09:00 GMT [2]. Eurozone HICP inflation is expected to rise to 2.9% year-over-year in April from 2.6% in March, while core inflation is anticipated to remain steady at 2.3% [2]. The flash Eurozone GDP is projected to increase by 0.2% quarter-on-quarter in Q1, unchanged from the previous reading, with annual growth seen slowing to 0.9% from 1.2% [2].
Market participants are closely watching these releases for their potential impact on currency markets. The US GDP report, due at 12:30 GMT, could be pivotal for the US Dollar Index (DXY), especially if the data surprises in either direction, as markets remain focused on Middle East developments [1]. A stronger-than-expected US GDP print may ease stagflation fears and support the US Dollar’s ongoing recovery [1]. The DXY is currently trading near its 200-day SMA at 98.53 and below its 200-week SMA at 103.13, with technical levels at 97.63 (support) and 100.63 (resistance) in focus [1].
For the Euro, the EUR/USD pair may remain flat if Eurozone HICP data meets expectations, but could depreciate if risk aversion increases due to geopolitical tensions [2]. The European Central Bank (ECB) is expected to keep rates unchanged but may signal a possible rate hike as early as June to counter rising energy-driven inflation [2]. The EUR/USD pair is trading around 1.1680, with technical indicators suggesting fading bullish momentum and a consolidative bias [2].
The Federal Open Market Committee (FOMC) recently voted 8-4 to keep interest rates unchanged within the 3.5%–3.75% range, marking the first instance of four dissenting votes since October 1992. The committee emphasized that “inflation remains elevated, partly due to the recent rise in global energy prices” [2].
CONCLUSION
Both the US and Eurozone are set to release key GDP and inflation data, with markets on edge due to ongoing geopolitical tensions and central bank policy signals. The US Dollar and Euro could see significant moves depending on the data outcomes, with inflation and growth figures likely to shape expectations for future monetary policy actions.