US Preliminary GDP (also referred to as Second Release GDP) measures the growth of the economy. Analysts consider GDP one the most important indicators so the Preliminary GDP report can have a significant impact on the movement of 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 13:30 GMT.
Indicator Background
GDP is one of the most important economic indicators and traders should treat it as a market-mover.
Preliminary GDP is the second release for Q4 2014. The estimate stands at 2.1%, which is lower than the first release for Q4, as Advance GDP came in at 2.6%. GDP in Q3 was unexpectedly strong, with a gain of 5.2%.
Sentiments and levels
With the Greek crisis on the backburner following an agreement to a bailout extension, the focus could return to the more important drivers of the pair: monetary policy divergence. If Eurozone inflation numbers don’t start to improve, the ECB will have to consider more QE. Over in the US, Fed chief Janet Yellen has tempered hopes of a mid-year rate hike, but the likelihood a higher rates in 2015 remains strong. So, the overall sentiment is bearish on EUR/USD towards this release.
Technical levels, from top to bottom: 1.1540, 1.15, 1.1373, 1.1313, 1.1270, and 1.12.
5 Scenarios
- Within expectations: 1.8% to 2.4%. In such a scenario, the EUR/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 2.5% to 2.9%: An unexpected higher reading can send the pair below one support line.
- Well above expectations: Above 2.9%: The chances of such a scenario are low. Such an outcome could push EUR/USD downwards, and a second support line might break as a result.
- Below expectations: 1.3% to 1.7%: A lower GDP figure than predicted could push the pair higher and break one level of resistance.
- Well below expectations: Below 1.2%. In this scenario, the EUR/USD could move higher and break above a second resistance line.
For more on the euro, see the EUR/USD
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