EUR/USD Daily Forecast – Euro Bid as Germany Narrowly Avoids Recession

EUR/USD continues to see buyers around the 1.10 area but is mostly trading in a range. Meanwhile, GDP growth in Germany rose slightly to save the country from going into a technical recession.
Jignesh Davda

German GDP up 0.1% in Third Quarter

Germany came close to slipping into a recession but a small 0.1% rise in GDP during the third quarter has prevented them from doing so. Analysts were looking for growth to contract 0.1%, predicting that a recession was on the way. The growth figures are still relatively weak but could stir some optimism for the euro.

The economic calendar shows the day ahead will be quite eventful. Later in the European session today, quarterly employment and GDP figures from the Euro area will be released. In the US session, producer price figures and unemployment figures are on the docket. As well, Fed chair Powell will testify again and several Fed members are scheduled to speak.

Considering the economic calendar, we may see some movement in EUR/USD which has otherwise not done much in the second half of the week. The currency pair has posted losses in seven out of the eight past session although has lost downward momentum since nearing the 1.10 level.

Technical Analysis

Over the near-term, EUR/USD faces an important resistance area at 1.1016. This marks a horizontal level as well as the 20-period moving average on a 4-hour chart. In a show of weakness, the exchange rate has been sold rather aggressively on approaches to this moving average ever since turning lower near the start of the month.

EURUSD 4-Hour Chart

If we do manage to get above the resistance area, the pair faces further resistance from the 50-day moving average. The indicator currently resides at 1.1040.

To the downside, a sustained break below 1.1000 would suggest a bearish continuation. However, a major technical area at 1.0970 could trigger fresh buying. This level represents the measured move target from a double top pattern that has been in play for nearly a week.

Bottom Line

  • EUR/USD continues to hold within a range.
  • There are several economic releases today as well as Fed member speeches and Fed Chair Powell’s testimony. This could trigger a bit of volatility.
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