- EUR/USD charted a spinning bottom candle on Thursday.
- That seller exhaustion candle indicates scope for a rise to 1.12.
- A better-than-expected US GDP could yield broad-based USD rally.
The EUR/USD market is showing signs of seller exhaustion ahead of the all-important US second-quarter economic growth figures.
The currency pair charted a spinning bottom candle on Thursday. That candlestick pattern is widely considered a sign of indecision in the market.
However, in EUR/USD's case, the spinning bottom has appeared at two-year lows and following the sell-off from highs above 1.14.
So, it seems safe to say that the spinning bottom represents indecision among the bears or seller exhaustion and the common currency could rise to 1.12 if the US data disappoints expectations.
Focus on US GDP
The Bureau of Economic Analysis will issue its first estimate for the annualized gross domestic product (GDP) for the second quarter at 12:30 GMT today.
The data is expected to show the economy expanded 1.8% in the second quarter following a 3.1% rise in the first three months of the year.
A better-than-expected figure could force markets to scale back expectations of aggressive Federal Reserve (Fed) easing, sending the US Dollar higher across the board. In this case, EUR/USD may fall below 1.11.
If the data prints below estimates, markets will again price in prospects of multiple rate cuts before the year-end, sending the EUR/USD above 1.12, as suggested by the spinning bottom candle.
As of writing, the pair is trading at largely unchanged on the day at 1.1150. The German import price index, scheduled for release at 06:00 GMT, could be ignored by investors, unless the number misses estimates by a big margin, in which case, the common currency could feel the pull of gravity.