When is the German Preliminary Q3 GDP and how could it affect EUR/USD?
German GDP overview
German gross domestic product (GDP) due at 07:00 GMT is expected to show the economy contracted 0.1% quarter-on-quarter in June to September (Q3) period, having decreased by 0.1% in the first quarter.
The annualized GDP is forecasted to print at +0.5% in Q3 vs. the previous quarter's reading of +0.4%.
How could it affect the EUR/USD?
A negative GDP print won't be a surprise and could strengthen the bearish pressures around the EUR, undermined by the German manufacturing recession, even though the forward-looking German ZEW survey pointed to some improvement in the outlook for the German economy. Notably, at -2.1, the ZEW Economic Sentiment Index for November surpassed expectations of -13 by a big margin.
Meanwhile, the technical set up continues to favor the bears, as the pair remains on the track to test the immediate support of mid-October lows at 1.0991. A break below which could intensify selling pressure, as the bears eye 1.0950 (psychological level) as the next support. The further downside in spot could expose the multi-year lows of 1.0879 once again.
However, if the data surprises on the upside, the pair could attempt a pullback towards 1.1040/56, the confluence zone of the 50 and 10-DMA. Buyers could yearn for a test of the 100-DMA at 1.1100 on a sustained break above the last. The 12-bar Moving Average Convergence and Divergence (MACD) on the 4-hour chart has turned bullish, also favoring a case for a brief correction.
Key Notes
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About German GDP
The Gross Domestic Product released by the Statistisches Bundesamt Deutschland is a measure of the total value of all goods and services produced by Germany. The GDP is considered as a broad measure of the German economic activity and health. A high reading or a better than expected number has a positive effect on the EUR, while a falling trend is seen as negative (or bearish).
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
