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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

  1. 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.
  2. Above expectations: 0.6% to 1.0%: An unexpected higher reading can push the pair above one  resistance line.
  3. 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.
  4. Below expectations: 0.0% to 0.4%: In this scenario, EUR/USD could drop below one support level.
  5. 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.

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