German GDP is a key release and is published each quarter. GDP measures production and growth of the economy, and is considered by analysts as one the most important indicators of economic activity. A reading which is better 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 7:00 GMT.
Indicator Background
German GDP is a key economic indicator, and provides an excellent indication of the health and direction of the German economy. Traders should pay close attention to this release, as an unexpected reading could affect the direction of EUR/USD.
The indicator has been rising steadily and hit 0.7% in Q2, its strongest gain since mid-2011. This edged out the estimate of 0.6%. The markets are expecting a weaker reading for Q3, with an estimate of just 0.3%.
Sentiments and levels
ECB head Mario Draghi cut the markets napping last week as he unexpectedly cut rates to just 0.25%. He also but firmly kept the “nuclear option“ of a negative deposit rate on the table, as he is almost out of room to make further cuts. With low inflation and low growth, the Eurozone continues to struggle and this will likely weigh on the euro.
In the US, the superb NFP report last week has increased chances of QE tapering in December. With a “Dectaper” in the air, it will be for EUR/USD to stage a recovery. So, the overall sentiment is bearish on EUR/USD towards this release.
Technical levels, from top to bottom: 1.3570, 1.35, 1.3440, 1.34, 1.3320 and 1.3240.
5 Scenarios
- Within expectations: 0.1% to 0.5%. In such a scenario, EUR/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 0.6% to 1.0%: An unexpected higher reading can push the pair above one resistance line.
- Well above expectations: Above 1.0%: A surge in the reading would likely boost the euro, and the pair could break a second line of resistance as a result.
- Below expectations: 0.0% to 0.4%: In this scenario, EUR/USD could drop below one support level.
- Well below expectations: Below 0.0%. A contraction in the reading could hurt the euro, and the pair could fall below a second level of support.
For more on the euro, see the EUR/USD forecast.
To follow this event live: [do action=”calendar-event” eventid=”ce2654a8-b444-4f35-b559-cbbca52c1aec”/]
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