The euro-dollar pair continues to trade within the eighth figure, alternately starting from the boundaries of the price range. The US currency is wary ahead of today's data on US economic growth for the first quarter and the results of the April meeting of the Federal Reserve, while the single currency is frozen in anticipation of the results of the ECB meeting and data on the growth of European inflation. Such significant fundamental factors do not make it possible for either the bulls or the bears of EUR/USD to fully show their character to bring the pair out of the "enchanted circle" of the eighth figure.
So today, the main news will come from the US. Data on the country's economic growth in the first quarter will be released at the beginning of the US session. General preliminary forecasts are very pessimistic: according to most experts, GDP will decline by 3.9-4%. If the indicator comes out at the stated level, the reaction of traders could be a short-term effect. But if the release is in the red zone, then the EUR/USD pair will fall into the turbulence zone, especially against the background of preliminary forecasts regarding the growth of the US economy in the second quarter.
In particular, the head of the Federal Reserve Bank of Dallas President Robert Kaplan recently said that according to his estimates, US GDP will decrease by 25-35 percent and will begin to recover in the second half of the year, subject to the lifting of restrictive measures (according to the results of the year and his calculations, the country's economy will decrease by 4 -5%). According to Kaplan, after the end of the epidemic, the model of consumer behavior will change: Americans will become more careful in their spending and will put off more for a rainy day. Goldman Sachs experts published similar forecasts: according to their calculations, the US economy will slow down in the second quarter by 24%, followed by recovery in the third and fourth quarters. In other words, if today's numbers come out worse than expected, then the likelihood of implementing the above scenarios will greatly increase. This fact will put pressure on the dollar, especially on the eve of the announcement of the results of the Fed meeting.
However, the results of the April meeting could disappoint both bulls and bears. According to general expectations, this meeting will be "passing", given the list and scope of previous decisions of the regulator. With 100 percent certainty, we can assume that the Fed will not touch the interest rate after the March events. In general, according to the overwhelming majority of currency strategists, the Fed will take a wait-and-see attitude at least until the beginning of summer (that is, until the June meeting) in order to evaluate the effectiveness of the measures already taken, as well as to monitor the dynamics of economic growth. At his press conference, Fed Chairman Jerome Powell, most likely, will confine himself to general phrases, focusing on the ability and willingness of the US regulator to support economic activity and asset markets. At the same time, he certainly will not reveal any details and generally avoid specifics, so as, on the one hand, not to overestimate market expectations, and on the other hand, not to provoke increased volatility in the markets.
Given Powell's previous statements, it can be assumed that in today's press conference he will try to encourage investors by assuring them that the regulator is in control of the situation in the context of the ongoing epidemic. He could reiterate that the Fed has paid off the liquidity crisis of the financial system in a timely manner and is using various programs (GeForce) to try to neutralize the negative consequences of the pandemic. Powell will confirm the unlimited nature of the liquidity offered to the market - both in time and in volume. At the same time, he will be extremely cautious in assessing future prospects, citing uncertainties regarding the duration of restrictive quarantine measures in the United States.
In other words, the dollar's "well-being" for today will primarily depend on how strong the recession of the US economy in the first quarter is. The results of the April meeting of the Fed will be secondary, since the market will mainly respond to the tone of Powell's rhetoric. If he manages to "infect optimism" in traders, then the greenback will strengthen its position, also against the euro - the price will return to the seventh figure again. But if the data on US GDP growth turns out to be much lower than forecasted, then the market will ignore his optimistic estimates.
As for trading solutions for the EUR/USD pair, it is better to take a wait-and-see position before data is released. From a technical point of view, while the pair has not overcome and consolidated above the resistance level of 1.0850 (the middle line of the Bollinger Bands indicator on the daily chart), bears have priority over the bulls. At the moment, buyers are again attacking the designated price target. They had already made similar attempts over the previous three days, but in the end the bears seized the initiative and returned the pair to the bottom of the eighth figure. In anticipation of upcoming events, the uncertainty over the pair is too high, so it is better to wait out the situation "on the fence" until the end of the day.
