EUR/USD: Trading the Preliminary German GDP February 2015

The German Preliminary GDP  measures growth  in the economy. GDP measures production and growth of the economy. A reading which is  higher than the market forecast is bullish for the euro.

Update:  German GDP grew 0.7% in Q4 – much better than expected

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

Published on Friday at 7:00 GMT.

Indicator Background

GDP is considered one of the most important economic indicators, and provides an excellent indication of the health and direction of the  German economy. Traders should pay close attention to the GDP release, as an unexpected reading could quickly affect the direction of EUR/USD.

The forecast for German Preliminary GDP for Q4  stands at 0.3%. This  would mark a slight improvement from  German Final GDP in Q3, which  posted a weak gain of  0.1%.

Sentiments and levels

The Greek crisis remains in the spotlight and  has overshadowed some positive euro-zone data. Greece and the troika (supported by Germany) remain on a collision course as to bailout, but a Grexit is unlikely. Still, things will probably get worse before they get better, and this could weigh on the euro. Over in the US, recent numbers have been lukewarm, but employment numbers remain strong. The excellent NFP report, with its positive revisions and bounce in wages removes some of the doubts about the upcoming rate hike. So, the overall sentiment is  bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.15, 1.1460, 1.1370, 1.1290, 1.12 and  1.1113.

5 Scenarios

1. Within expectations: 0.0% to 0.6%. In such a scenario, EUR/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 0.7% to 1.1%: An unexpected reading  of zero or higher  could send  the pair  well above  one  resistance line.
3. Well above expectations: Above 1.1%: The chances of such a scenario are low. Such an outcome would likely push EUR/USD  upwards, and a second  resistance level might be broken as a result.
4. Below expectations: -0.5% to -0.1%:   A  contraction in  GDP could cause the  pair to  drop and break one support level.
5. Well below expectations:  Below -0.5%. A sharp contraction in growth could push EUR/USD below a second support level.

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

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