EUR/USD: Trading the US Preliminary GDP

US  Preliminary GDP is a measurement of the production and growth of the economy. Analysts consider GDP one the most important indicators of economic activity, and publication of  Preliminary GDP could have a significant impact on the movement of EUR/USD. A reading which is higher than the market forecast is bullish for the dollar.

Here are all the details, and 5 possible outcomes for EUR/USD.

Published on Tuesday at 13:30 GMT.

Indicator Background

GDP reports are released quarterly, with Preliminary GDP following the Advance GDP report. Traders should pay particular attention to this economic indicator and treat it as a market-mover.

Advance GDP for Q3 posted an excellent gain of 2.9%, beating the forecast of 2.5%. The estimate for Preliminary GDP stands at 3.0%.

Sentiments and levels

Last week was uneventful, with the markets off for the Thanksgiving holiday in the US. With a resumption of regular trade this week, monetary divergence could weigh on the euro.  So, the overall sentiment is bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.0850, 1.0780, 1.0710, 1.0520 and  1.0460

5 Scenarios

1. Within expectations: 2.7% to 3.3%. In such a scenario, the EUR/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 3.4% to 3.8%: An unexpected higher reading can send the pair  below one support  line.
3. Well above expectations: Above 3.8%: Such an outcome could push EUR/USD downwards, and a second  support line might break as a result.
4. Below expectations: 2.2% to 2.6%: A weak figure could  push the pair higher  and break one level of resistance.
5. Well below expectations: Below 2.2%.  In this scenario, the EUR/USD could  move higher  and break above a second resistance line.

For more on the euro, see the  EUR/USD forecast