Gross Domestic Product (GDP) indicator is a measurement of the production and growth of the economy. Analysts consider GDP one the most important indicators of economic activity. A reading which is better than the market forecast is bullish for the euro.
Here are all the details, and 5 possible outcomes for EUR/USD.
Published on Wednesday at 7:00 GMT.
Indicator Background
German GDP is released quarterly. As the largest economy in the Eurozone, German GDP is highly anticipated by the market and can have a significant effect on the movement of EUR/USD.
German GDP has not looked very strong, underscoring a weak Eurozone economy. The indicator posted a gain of 0.4% in Q2, close to the forecast of 0.5%. The indicator is expected to soften to 0.3% in Q3.
Sentiments and levels
With the Federal Reserve once again contemplating a rate hike in December, monetary divergence has sharpened between the ECB and the Fed. The US economy continues to outperform the sluggish Eurozone, which means that the euro will be likely remain under pressure. So, the overall sentiment is bearish on EUR/USD towards this release.
Technical levels, from top to bottom: 1.0900, 1.0810, 1.0760, 1.0715, 1.0615 and 1.0550.
5 Scenarios
- Within expectations: 0.0% to 0.6%. In such a scenario, EUR/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 0.7% to 1.1%: A strong reading could send the pair above one resistance line.
- Well above expectations: Above 1.1%: The chances of such a scenario are low. Such an outcome would likely push EUR/USD upwards, and a second resistance level might be broken as a result.
- Below expectations: -0.5% to -0.1%: A contraction in GDP could cause the pair to drop and break one support level.
- Well below expectations: Below -0.5%. A sharp contraction in growth could push EUR/USD below a second support level.
For more on the euro, see the EUR/USD.