The U.S. dollar rebounded from a 9 -week low supported by a surge in U.S. treasury yields after the government reported strong U.S. economic growth for the first quarter and positive developments on the latest jobless claims report for last week.
US Gross Domestic Product (GDP) data for the first quarter of 2021 recorded a growth of 6.4% higher than the previous figure of 4.3%. The growth was also reported to be the second fastest since the third quarter of 2003.
The report has rebalanced the previous depreciation of the US dollar following the market reaction to the FOMC meeting. Federal Reserve (Fed) Chairman Jerome Powell dispelled speculation for early action to reduce bond purchases by the central bank.
The European session on Friday will focus on the European zone GDP report for the first quarter which will affect the movement of the Euro currency.
In contrast to the US which saw growth for 3 consecutive quarters, the European economy is expected to decline for 2 consecutive quarters.
The price movement on the chart of the EUR/USD currency pair, the price is seen to have jumped from the RBS zone (resistance become support) 1.20600 to touch the level of 1.21500 at the latest resistance zone.
The rise is also a 9-week high maintaining a bullish trend movement for 4 consecutive weeks.
After reaching the latest high, prices declined again following the strengthening of the US dollar after the US GDP report.
However, the price is seen still moving in a bullish trend and is above the support level of the Moving Average 50 (MA50) on the 1 -hour time frame.
If the price falls below the MA50 level, the RBS 1.20600 zone will be tested again. A decline below that zone will signal a change in the bearish trend for investors.
The price is then seen to be heading back to the previous RBS focus zone at 1.20000.
On the other hand, the expectation for the price to continue rising will test the resistance zone 1.21500-1.21800 to continue to record the latest highs before closing trading this week.
The continued rise is seen to be heading to the level around 1.22500 which is the resistance zone in last February's trading.
