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
- 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.
- Above expectations: 3.3% to 3.7%: An unexpected higher reading can send the pair well below one support line.
- 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.
- 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.
- 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.
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