With the Eurozone printing Germany’s GDP and a bunch of lower-tier releases and the U.S. publishing its Q2 GDP report, I’m setting my sights on EUR/USD today.
Where do you think the pair will go?
Before we talk about the setup, check out the major headlines that moved the markets during the Asian session:
Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar:
- KOF economic barometer at 7:00 am GMT
- Spain’s flash CPI at 7:00 am GMT
- Germany’s unemployment change at 7:55 am GMT
- Germany’s preliminary GDP at 8:00 am GMT
- ECB’s economic bulletin at 8:00 am GMT
- Italy’s unemployment rate at 8:00 am GMT
- Eurozone’s unemployment rate at 8:00 am GMT
- U.S. advance quarterly GDP at 12:30 pm GMT
What to Watch: EUR/USD
EUR/USD is consolidating in a potential rising wedge after popping up by 500 pips since early July.
Today’s economic releases will tell us if the pattern will end in a reversal for the euro.
Germany is printing its quarterly GDP, which is expected to show a 9.0% contraction in Q2 2020.
Meanwhile, today’s U.S. GDP release can explain why the Fed is maintaining its dovish stance. Markets see the economy contracting by around 35% in Q2 2020 and, unlike in the Eurozone, Fed Chairman Powell has shared that the economy’s path forward is “extraordinarily uncertain.”
A better-than-expected German GDP release would push the euro higher especially since investors are already discounting a technical recession in favor of promising leading indicators from one of the Eurozone’s biggest economies.
A downside surprise, on the other hand, or a better-than-expected U.S. GDP report could inspire dollar-buying and drag EUR/USD below the wedge pattern and the 100 SMA on the 1-hour time frame.