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The euro-zone’s third largest economy contracted by 0.2% in Q3 according to the preliminary report, better than a drop of 0.4% that was expected, and definitely better than previous quarters. The economy shark by 2.4% on year-over-year basis, and dropped by 0.7% in Q2.

EUR/USD is ticking higher.

Earlier, also Germany and France exceeded GDP expectations.

The Italian economy contracted for a fifth consecutive quarter. During this period, the unemployment rate soared. This GDP report provides some hope: contraction is slowing down. However, the dark clouds over Europe could mean that this is a temporary slowdown, not even growth, and that the Italian contraction could deepen once again, as the whole continent, including Germany, could suffer.

EUR/USD is now above 1.2750, but not going anywhere fast. Yesterday’s high of 1.2778 provides some resistance before the round 1.28 line. On the downside, 1.2690 provides some support.

For more, see the eur to usd forecast.