EUR/USD:Trading the United States GDP

EUR/USD:Trading the United States GDP

The Gross Domestic Product (GDP) is a measurement of the production and growth of the economy. Analysts consider GDP one the most important indicators of economic activity. Thus, publication of the United States  GDP  may impact on 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 Wednesday at 13:30 GMT.

Indicator Background

GDP is released quarterly, and provides an excellent indication of the health and direction of the economy. Traders should pay particular attention to this economic indicator and treat it as a market-mover.

GDP has risen over the past two readings, and the February forecast is for a robust increase of 2.8%. This would be the best reading since February 2012, and a clear sign of an improving US economy. Will the GDP indicator continue on an upward trend this month?

Sentiments and levels

The G-20 meeting in Mexico has not provided any concrete resolutions for the Eurozone financial crisis, and  IMF funding for the Greek bailout is still up in the air.   If the economic data coming out of the US continues to be positive, the dollar could strengthen at the Euro’s expense. Thus, the overall sentiment is bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.3615, 1.3550, 1.3450, 1.3333, 1.3280, and 1.3212.

5 Scenarios

  1. Within expectations: 2.4% to 3.2%. In such a scenario, the EUR/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 3.3% to 3.7%: An unexpected higher reading can send  the pair  well below one support line.
  3. Well above expectations: Above 3.7%: An  unexpected surge in the reading  would push EUR/USD downwards, and a second support level might be broken as a result.
  4. Below expectations: 1.9% to 2.3%:   A lower GDP figure than predicted could cause the  pair to climb and break one level of resistance.
  5. Well below expectations: Under 1.9%. In this scenario, the  EUR/USD will rise and could break a second resistance level.

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.