EUR/USD: Trading the US Advance GDP

US  Advance GDP is a measurement of the production and growth of the economy. Analysts consider GDP one the most important indicators of economic activity, and publication of  Advance GDP could have a significant impact on the movement of EUR/USD. A reading which is better than the market forecast is bullish for the dollar.

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

Published on Thursday at 13:30 GMT.

Indicator Background

GDP reports are released quarterly, and provide an excellent indication of the health and direction of the economy in the past quarter. Traders should pay particular attention to this economic indicator and treat it as a market-mover.

Final  GDP for Q4 posted a strong gain of 1.4%  in Q4, beating the estimate of 1.0%.  Advance GDP for Q1 is expected to be much softer, with a forecast of 0.7%.

Sentiments and levels

The ECB  may not have added any new stimulus, but Mario Draghi has reiterated his commitment to push inflation higher. The Fed is unlikely to make a move at the April meeting, but a June hike remains a strong possibility. So, the overall sentiment is  bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.1460, 1.1410, 1.1335, 1.1220, 1.1140 and  1.10.

5 Scenarios

1. Within expectations: 0.4% to 1.0%. In such a scenario, EUR/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 1.1% to 1.5%: An unexpected higher reading can send the pair  below one support  line.
3. Well above expectations: Above 1.5%: Such an outcome could push EUR/USD downwards, and a second  support line might break as a result.
4. Below expectations: -0.1% to 0.3%: A  weak GDP reading could  push the pair higher  and break one level of resistance.
5. Well below expectations:  Below -0.1%.  In GDP contracts, EUR/USD could  move higher  and break above a second resistance line.

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