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EUR/USD: Trading the German IP February 2012

The  German Industrial  Production indicator  measures change in production in the important manufacturing,  utilities and mining sectors. A reading which 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 Tuesday at 11:00 GMT.

Indicator Background

The German  Industrial Production  gives analysts  a snapshot of economic conditions in important industrial sectors in the German economy. As the indicator is quite volatile,  traders should keep in mind that the  market forecasts are often not accurate.

After an increase in December, the indicator disappointed last month, contracting by 0.6%.  For February, the markets are predicting another contraction  of 0.1%.  Will  the indicator surprise  the markets and climb into positive territory this month?

Sentiments and levels

All market eyes are on the debt negotiations between the troika and the Greek government, as  the latter must make a  major bond payment next month. Other European countries, notably Portugal, are also in deep trouble, and this will weigh on the euro. So, the overall sentiment  has turned from neutral to  bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.3212, 1.3145, 1.3060, 1.30, 1.2945, 1.2873, and 1.2760.

5 Scenarios

  1. Within expectations: -0.3% to 0.5%: In such a case, the Euro 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 send EUR/USD well above one resistance line.
  3. Well above expectations: Above 1.0%: The chances of such a scenario are very low. A second resistance line might be broken on such an outcome.
  4. Below expectations:  -0.8% to -0.4%: A  weak reading  could result in the pair dropping below  one support level.
  5. Well below expectations: Below -0.8%: A serious  drop in the indicator  could well push  EUR/USD downwards, and two or more support levels could be broken.

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

 

 

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.