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Cautious Fed overshadowing US GDP revision data for the dollar

The US economy is on a strong path that doesn’t show any signs of slowing down. In the second quarter of 2018, the US economy grew at an annualized rate of 4.1%, which is the strongest reading since the third quarter of 2014. During the New York session, at 13:30 GMT, the preliminary GDP reading for the second quarter of 2018 will show the revised economic growth figures.

The revised GDP figures are expected to print a solid 4.0% growth versus 4.1% in the previous reading.
Economists now believe that Trump’s policies will help boost the US economy further to sustain the 4% economic growth throughout the entire year. The Atlanta Fed has raised its third quarter GDP forecast to 4.6%. The main driver behind the stable economic expansion is strong consumer spending, but also the increase in exports and government spending.

For forex traders, the question is whether the US dollar will move in reaction to expanding US economic growth – or to the seemingly more dovish expectations from the Federal Reserve. If the Fed is not going to react to the stronger US growth by raising rates faster, the positive impact on the US dollar could be limited.
The greenback has just hit a 4-week low, extending its recent decline against its major counterparts. Among the major currency pairs, the US dollar saw the biggest losses against the Euro.

Source: LCG MT4, 29/8/2018

The EUR/USD exchange rate is looking to retest the key resistance level established at 1.1745. For a change in the market sentiment and a material change in the trend direction, a strong breakout and a daily close above 1.1745 is needed.

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