The US GDP growth in the first quarter slowed down more than expected, according to official preliminary data released on Friday.
The report of the Bureau of Economic Analysis said that GDP growth was 0.8%, seasonally adjusted, slowing down the pace of 1.4% registered in the fourth quarter of 2015.
GDP Price Index (tools for calculating the inflation rate in the country) was 0.6% in the first quarter, less than the projected 0.7%, compared with a growth of 0.9% in the previous quarter.
The economic growth was the lowest since the first quarter of 2015 and did not meet the consensus forecast of 0.9%. This is the second preliminary estimate of US GDP for the first quarter, the first was 0.5%.
"The good news is that the figure was revised upward, though it does not reach the forecast. The question, however, is whether this is sufficient to support the dollar bulls, "- said Ryan Littlstoun, analyst at ForexLive.
It seems that the answer to this question is yes. Another important question is whether the Fed considers the data good enough to raise rates. Market participants are eagerly awaiting the Yellen speech, which may clarify the situation.
After the release of the report EUR/USD was trading at 1.1162, down from 1.1174 prior to the publication, the pair GBP/USD fell 1.4630 from 1.4650, while the USD/JPY pair was trading at 109.56 from 109.62.
Meanwhile, traders remain cautious against the yen, after on Thursday evening, the G7 leaders confirmed the commitment of the exchange rates to avoid "competitive devaluation" of their currencies and cautioned against "disorderly" currency fluctuations.
The USD Index, which tracks the greenback against a trade-weighted basket of six major currencies, was at 95.34, up from 95.30 on the eve of the report output.
The dollar index is ready to show the best monthly result since November last year, while investors are waiting for the new forecasts of the head of the US Federal Reserve for a rate hike in the coming months.