Yesterday, the U.S. dollar strengthened following reports that second-quarter GDP data exceeded economists' expectations. While U.S. economic growth slowed in the first half of the year as consumers cut back on spending and businesses sought to shield themselves from frequent and unpredictable changes in the Trump administration's trade policy, the overall picture remains relatively stable.

According to the U.S. government, inflation-adjusted gross domestic product — a measure of the value of goods and services produced in the United States — grew by 3% on an annualized basis in the second quarter. This figure, which surpassed many economists' expectations, signals continued resilience in the U.S. economy despite persistent concerns about inflation and a potential slowdown in global economic growth.

Second-quarter GDP growth was driven by a combination of factors, including stronger consumer spending, steady business investment, and rising exports. Consumer spending — a major component of the U.S. economy — remained solid despite inflationary pressures, reflecting sustained confidence and a willingness to spend. Business investment also contributed significantly, with companies continuing to allocate capital to equipment, software, and R&D. These investments support productivity gains and long-term economic growth.

However, despite the solid second-quarter performance, average growth for the first half of the year stood at 1.25%, a full percentage point lower than the 2024 figure. The report also noted that volatility in trade and inventories caused by tariffs distorted the overall GDP data this year. As a result, economists are paying closer attention to final sales to private domestic purchasers — a narrower measure of demand — which rose by just 1.2% in Q2, the slowest pace since late 2022.

The trend of weakening demand over the past two quarters is now clearly visible, and growth appears to be falling short of its long-term potential. Many economists believe this will soon push the Federal Open Market Committee (FOMC) to resume cutting interest rates — and that may happen sooner rather than later.

In light of the new data, and despite months of public pressure, threats, and social media criticism from Donald Trump, Federal Reserve Chair Jerome Powell stated yesterday that interest rates remain at an appropriate level to manage ongoing uncertainty related to tariffs and inflation. "There's still a lot of uncertainty that needs to be resolved," Powell said on Wednesday after the central bank decided to leave rates unchanged. "It doesn't appear that we're close to the end of this process." The FOMC voted 9–2 to keep the federal funds rate in the 4.25%–4.50% range. Governors Christopher Waller and Michelle Bowman, both Trump appointees, dissented, voting for a 25-basis-point rate cut.

Technical Outlook for EUR/USD Buyers now need to reclaim the 1.1460 level. A move above this would open the way for a test of 1.1500. From there, it may be possible to target 1.1535, although doing so without support from large market participants could be difficult. The most distant bullish target lies at 1.1570. In case of a decline, significant buying activity is expected around 1.1410. If this level fails to attract interest, a drop toward 1.1370 or even 1.1345 may provide new opportunities for opening long positions.

Technical Outlook for GBP/USD Pound buyers need to break through the nearest resistance at 1.3275. This would allow a move toward 1.3310, though overcoming that level will likely be difficult. The furthest bullish target is the 1.3340 level. If the pair falls, bears will attempt to regain control at 1.3230. A successful break below this range would deal a serious blow to bullish positions and could drive GBP/USD down to 1.3180, with a possible move toward 1.3125.