EUR/USD Forecast: German Industrial Production and Eurozone GDP Numbers in Focus

Highlights

• The EUR/USD declined by 0.30% on Wednesday, ending the session at $1.07641.
• German industrial production and Eurozone GDP numbers will be focal points on Thursday.
• US labor market stats also warrant consideration later in the session.

Wednesday Overview

The EUR/USD declined by 0.30% on Wednesday. Following a 0.37% loss on Tuesday, the EUR/USD ended the day at $1.07641. The EUR/USD rose to a high of $1.08047 before falling to a low of $1.07586.

German Industrial Production and Eurozone GDP Numbers in the Spotlight

On Thursday, German industrial production and Eurozone GDP numbers warrant investor attention. An upswing in industrial production could influence buyer appetite for the EUR/USD. The German manufacturing sector accounts for less than 30% of the German economy. Improving numbers would ease fears of a prolonged economic recession.

Economists forecast industrial production to increase by 0.2% in October vs. a 1.4% decline in September.

However, Eurozone GDP numbers for Q3 will have more impact. An upward revision to Q3 GDP numbers could support bets on a higher-for-longer ECB rate path. According to second estimate figures, the Eurozone economy contracted by 0.1% in Q3. Aside from the headline numbers, private consumption and services need consideration.

Beyond the numbers, ECB commentary will move the dial. ECB President Christine Lagarde is on the calendar to speak.

US Jobless Claims in the Spotlight

On Thursday, US jobless claims will garner investor interest. We expect increased market sensitivity to the weekly report as investors consider the US Jobs Report (Fri). A larger-than-expected rise in jobless claims would support Q1 2024 Fed rate cut bets.

Weaker labor market conditions could impact wage growth and disposable income. A downward trend in disposable income would affect consumer spending and dampen demand-driven inflation. A softer inflation outlook would support a less hawkish Fed rate path.

Economists forecast initial jobless claims to increase from 218k to 222k in the week ending December 2.

Short-Term Forecast:

EUR/USD near-term trends hinge on the US Jobs Report (Fri) and central bank forward guidance. Weaker US wage growth would lead to expectations of a more dovish stance from the Fed, affecting demand for the US dollar.

EUR/USD Price Action

Daily Chart

The EUR/USD sat below the 50-day EMA while holding above the 200-day EMA, sending bearish near-term but bullish longer-term price signals.

A EUR/USD break above the 50-day EMA and $1.07838 resistance level would support a move toward the $1.09294 resistance level.

German and Eurozone economic indicators, ECB commentary, and US jobless claims will influence buyer demand.

However, a EUR/USD break below the 200-day EMA would bring the $1.06342 support level into view.

The 14-period Daily RSI, 44.42, indicates a EUR/USD fall to $1.07000 before entering oversold territory.

4-Hour Chart

The EUR/USD sat below the 50-day and 200-day EMAs, sending bearish price signals.

A EUR/USD break above the $1.07838 resistance level and 200-day EMA would bring the 50-day EMA into play.

However, a EUR/USD drop below the $1.07500 handle would bring the $1.06342 support levels into play.

The 14-period RSI on the 4-hour chart, 25.93, shows the EUR/USD in oversold territory. Buying pressure may intensify at the $1.07500 handle.