Investing.com -- EUR/USD fell considerably on Thursday, as strong GDP growth in the U.S. over the second quarter bolstered the case of hawks on the Federal Reserve for an imminent interest rate hike before the end of the calendar year.
The currency pair traded between 1.0894 and 1.0990 on Thursday, before settling at 1.0931, down 0.0054 or 0.48% for the session. After surging by more than 1% against the dollar on Monday, the euro has now closed slightly lower against its American counterpart on three consecutive sessions. With one trading session left in July, EUR/USD is down by approximately 2.7% on the month.
EUR/USD likely gained support at 1.0808, the low on July 20 and was met with resistance at 1.1131, the high from July 27.
The U.S. Department of Commerce's Bureau of Economic Analysis (BEA) in a quarterly release on Thursday morning reported that U.S. GDP for the second quarter increased by 2.3%. The reading fell below high end of consensus estimates of a 3.5% increase, but was above the low end of forecasts for a gain of 1.9%. The BEA also upwardly revised first quarter GDP to a 0.6% increase from a prior reading of negative 0.2%.
It came one day after the Federal Open Market Committee (FOMC) observed signs of an improving U.S. labor market and economy in its latest monetary policy statement. Following the completion of its two-day July meeting on Wednesday, the FOMC said the labor market has shown signs of progressing, citing indicators that showed the underutilization of labor resources have diminished in recent months. Last month, the U.S. unemployment rate fell by 0.2% to 5.3%.
As expected, the FOMC kept short-term interest rates unchanged without offering any indications on whether it could begin raising its benchmark Federal Funds Rate later this fall. U.S. short-term interest rates have remained level between zero and 0.25% for nearly six years since the end of the Financial Crisis. Nearly a decade has passed since the Federal Reserve last instituted a rate hike.
Elsewhere, there were positive indications of accelerated economic growth in Ireland and Spain, two nations which required more than €100 billion in bailout support from the euro zone combined to emerge from the Financial Crisis of 2008. In Ireland, annual economic output last year reached €189 billion as the Irish government revised annual growth upward to 5.2% for 2014. Spanish GDP, meanwhile, rose by 1% in the second quarter as the nation experienced its strongest growth period in eight years.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, surged to an intraday high of 97.88, before falling back to 97.61 (up 0.63%) in U.S. afternoon trading.