Volatility Risk Around US GDP

US GDP DueAlong with the January ECB meeting, the other key focus for markets today will be advance US Q4 GDP.  Yesterday, both the US services and manufacturing PMIs were seeing coming in above forecasts, adding to the recent run of strong US data. Forecasts for today, however, are set a little low. The market is looking for a GDP print of 2%, down from the prior quarter’s 4.9%. Given the low expectation for today, there is plenty of room for an upside surprise which, if seen, should help drive USD higher.Fed ImplicationsMarket expectations regarding expected Fed easing this year have shifted recently. With data showing greater resilience than many were anticipating, and with inflation seen ticking back up last month, traders have scaled back their near-term rate-cut expectations. Indeed, recent Fed commentary has further pushed back against those looking for near-term cuts. With this in mind, the implications for today’s data are clear: an upside beat will be seen as further reason to delay easing, supporting USD near-term while an undershoot will put easing back on the table, pressuring USD.Technical ViewsEURUSDFor now, EURUSD remains below the 1.0937 level. While below here, a test of the 1.0785 level is the next focus point. Bulls will need to defend that area to maintain a broader upside focus with 1.1126 the key target for bulls.  Below there, however, 1.0515 is the next key support to note.