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Euro Latest: German GDP in Crash Mode, EUR/USD Eyes Crucial Trendline

Euro Latest: German GDP in Crash Mode, EUR/USD Eyes Crucial Trendline

Justin McQueen, Strategist

EUR/USD Price Analysis & News

  • German GDP in Crash Mode
  • Q2 Growth Will Show a Much Larger Contraction
  • Euro Unmoved as Tight Range Persists

GDP in Crash Mode: German Q1 GDP contracted by 2.2% on the quarter, matching economic forecasts, while the yearly rate posted a larger than expected decline. However, if there is one silver lining for Germany, is that they had outperformed the Eurozone, which saw a quarterly contraction of 3.8%. That said, while the Q1 GDP figure is the largest contraction since 2009, indications for Q2 growth are already signalling a much larger contraction of circa 7%

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Market Reaction: Overall, the Euro saw a very muted reaction to the release given that the number is outdated and thus only provides a look at the economy from the rearview. Alongside this, with markets typically forward-looking in nature, the focus remains on the broader macro themes, in particular the re-opening efforts of economies to assess the potential recovery outlook as well as hopes on a possible vaccine.

EUR/USD Technical Levels

Near-term resistance situated at 1.0830-40 to cap recent upside. While the outlook for the Euro remains weak, the currency has been trading in a tight range as of late and thus the prospect of a breakout has increased. With that in mind, for a bearish breakdown in the pair eyes for a move below key trendline support stemming from the March lows.

EUR/USD Bullish
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -18% 21% -2%
Weekly -41% 102% -6%
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EUR/USD Price Chart: Daily Time Frame

--- Written by Justin McQueen, Market Analyst

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.