The Advanced Gross Domestic Product (GDP) provides a measurement of the production and growth of the economy. Analysts consider GDP one the most important indicators of economic activity. This indicator is published every quarter, and may impact on EUR/USD. A reading which is higher than the market forecast is bullish for the dollar.
Here are all the details, and 5 possible outcomes for EUR/USD.
Published on Friday at 12:30 GMT.
Indicator Background
The US Advance GDP provides an excellent indication of the health and direction of the economy. Traders should pay particular attention to this economic indicator as any unexpected reading could change the direction of EUR/USD.
GDP rose nicely over the past two quarters, with a reading in Q4 of 2.8%. However, the market prediction for Q1 has been lowered to 2.5%. Given the weak data which has come out of the US during this week, a poor reading could spell trouble for the dollar. Will the GDP indicator disappoint, or perform better than the market expectation?
Sentiments and levels
While Germany’s economy seems strong once again, the crisis in Europe’s larger peripheral countries is far from resolution. This week’s poor PMI numbers are another indication that the continent continues to grapple with tough times. Also the French presidential elections and the difficulties in Spain will weigh on the Euro. Thus, the overall sentiment is bearish on EUR/USD towards this release.
Technical levels, from top to bottom: 1.3437, 1.34, 1.33, 1.3212, 1.3165, 1.3110 and 1.3050.
5 Scenarios
- Within expectations: 2.2% to 2.8%. In such a scenario, the EUR/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 2.9% to 3.2%: An unexpected higher reading can send the pair below one support level.
- Well above expectations: Above 3.2%: An unexpected surge in the reading would push EUR/USD downwards, and a second support level might be broken as a result.
- Below expectations: 1.8% to 2.1%: A lower GDP figure than predicted could cause the pair to climb and break one line of resistance.
- Well below expectations: Below 1.8%. In this scenario, the EUR/USD could break a second resistance line or more.
For more on the Euro, see the EUR/USD forecast.
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