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The European Industrial  Production indicator measures production in the important manufacturing, energy supply and mining sectors. A reading that is higher than the market forecast is bullish for the Euro.

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

Published on Thursday at 10:00 GMT.

Indicator Background

The indicator readings, published monthly, have a relatively minor impact on the markets. This is because  both France and Germany, which comprise about half of the  eurozone economy,  release their production figures separately. As such, it is not a major market-mover for EUR/USD, but is nevertheless  a useful indication of the health of the eurozone economy.

The indictor  hovered close to the zero level for most of 2011, dipping above and below this level. In December, the indicator showed some   improvement,  rising to  -0.1%,   up from the November reading of -2.0%.   The forecast for this month stands at -0.2%.

Traders should note that the market forecasts were within expectations for the past two readings. If the markets are again accurate in their prediction, the reading will  likely have little impact on the Euro.

Sentiments and levels

EUR/USD dropped sharply last week, as banks and investors  remain  jittery about the deep financial crisis and the future of the Euro. The dollar has been on an upward trend, as econmic data in the US is showing improvement. So, the overall sentiment is bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.30, 1.2945, 1.2873, 1.2734, 1.2640, 1.2587 and 1.2520.

5 Scenarios

  1. Within expectations: -0.6% to 0.2%: In such a case, the Euro is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 0.3% to 0.8%: An unexpected higher reading can send EUR/USD well above one resistance line.
  3. Well above expectations: Above 0.8%: The chances of such a scenario are very low. A second resistance line might be broken on such an outcome.
  4. Below expectations:  -1.2% to -0.7%: A  poor reading  would push down on EUR/USD, and one support level could be broken.
  5. Well below expectations:  Below -1.3%: Due to  the  ongoing financial crisis engulfing  the eurozone, such an outcome cannot be ruled out. In this scenario, the pair could break two support levels.

For more on the Euro, see the EUR/USD forecast.  

 

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