The USD index exceeded 2017 peaks and extended the ascent to the levels just below the 104.00 figure earlier in the day. The prices were rejected from the multi-year barrier as the bulls were disappointed by unexpectedly weak economic data out of the United States.

The first revision of the GDP showed the economy contracted 1.4% year-over-year in the first quarter versus a 1.1% growth expected. The report marked a significant deterioration as compared with the last quarter of 2021 when the economy grew by a robust 6.9%. 

In a knee-jerk reaction, the buck fell from the 103.93 zone but managed to bounce off 103.50 and regained the upside impetus, suggesting the bulls have mostly shrugged off the dismal report that won’t deter the Fed from raising rates in an aggressive manner amid stubbornly high inflation. 

EURUSD came off long-term lows seen around 1.0470 but failed to regain the 1.0500 mark in early North American trading, and the bearish performance of the common currency appears unchanged as well as a downbeat negative outlook against the backdrop of the Fed-ECB divergence. Should the mentioned lows fail to withstand the pressure, the common currency may threaten 2017 lows around 1.0340. In turn, parity will be in the cards if the pair continues to lose ground in the coming days or weeks. 

As a reminder, the Federal Reserve is widely expected to raise its interest rate by 50 basis points next week. Should the central bank express a hawkish tone in its accompanying statement, the buck will extend the rally towards fresh multi-year peaks, even as the overbought conditions persist for some time already.