EURUSD correction to 1.1050 remains in force

The U.S. economy, fueled by consumer spending, grew faster in the second quarter than originally estimated.

Gross domestic product increased at a 3.0% annualized rate last quarter, revised up from the 2.8% rate reported last month, the Commerce Department's Bureau of Economic Analysis said in its second estimate of second-quarter GDP on Thursday. The economy grew at a 1.4% pace in the first quarter.

Initial claims for state unemployment benefits fell 2,000 to a seasonally adjusted 231,000 for the week. Economists polled by Reuters had forecast 232,000 claims for the latest week.

The Labor Department's Bureau of Labor Statistics last week estimated that employment growth was overstated by 68,000 jobs per month. Most economists viewed this so-called benchmark revision estimate as misleading.

The number of Americans filing new applications for jobless benefits slipped last week, but re-employment opportunities for laid-off workers are becoming more scarce, a sign that the unemployment rate probably remained high in August.

Reduced hiring due to tighter monetary policy is accounting for the loss of labor market momentum, rather than layoffs. It has attracted the attention of officials at the U.S. central bank, including Fed Chair Jerome Powell who last week said "the time has come for policy to adjust."

Economists are expecting the jobless rate this month to either have remained near a three-year high of 4.3% or fallen to 4.2%. The unemployment rate has risen for four straight months, partly reflecting an immigration-induced surge in labor supply.

Consumer spending, which accounts for more than two-thirds of the economy, rose 2.9%. Inflation was fairly moderate, improving consumers' purchasing power. Income at the disposal of households after accounting for inflation increased by 1.0%.

All these published data don’t contradict the Fed's policy intentions, but in the short term create impulses for corrections of financial instruments, including the EURUSD’s pullback.

From a technical point of view, EURUSD is still trying to reach the 1.1050 level for a retest, so this target remains relevant, but this should be facilitated by fundamental factors, namely by the publication of the U.S. core personal consumption expenditures (PCE) price index today. If the actual value is higher than the forecast one, it will push EURUSD down.

The final recommendation is EURUSD short-selling if the U.S. PCE price index (YoY) comes out above expectations of 2.7%.

The profit could be fixed at the level of 1.1050. The Stop loss could be placed at 1.1200.

The volume of the opened position should be set so that the value of a possible loss, defined with a protective stop order, doesn’t exceed 2% of your deposit.