German Preliminary GDP is a measurement of the production and growth of the economy and is considered one the most important economic indicators. 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 Friday at 6:00 GMT.
Indicator Background
German GDP is released on a quarterly basis and provides an excellent indication of the health and direction of the economy in the past quarter. Preliminary GDP is published about 10 days prior to the Final GDP report. The Eurozone will also publish Flash GDP on Friday, so we could see some volatility from EUR/ USD around the time of the release of these two key events.
German Final GDP for Q4 came in at a modest 0.3%. The markets are expecting a significant improvement from Preliminary GDP for Q1, with an estimate of 0.6%.
Sentiments and levels
The markets are unclear as to what the ECB and the Federal Reserve have planned for the near future. Even if the ECB refrains from any additional stimulus and the Fed doesn’t raise rates in June, the euro has lost its safe haven status and its impressive recovery may have ended. So, the overall sentiment is bearish on EUR/USD towards this release.
Technical levels, from top to bottom: 1.1535, 1.15, 1.1460, 1.1325, 1.1140, and 1.1070.
5 Scenarios
- Within expectations: 0.3% to 0.9%. In such a scenario, EUR/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 1.0% to 1.4%: A strong reading could push the pair above one resistance line.
- Well above expectations: Above 1.4%: 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: -0.1% to 0.2%: A lower GDP figure than predicted could cause the pair to drop and break one support level.
- Well below expectations: Below -0.1%. A very weak reading could see EUR/USD drop and break below two or more support levels.
For more on the Euro, see the EUR/USD.