EURUSD on the verge of breakdown

24 November 2023 127
EURUSD on the verge of breakdown

Today at 7 a.m. GMT Germany will publish its GDP for the third quarter of the current year.


It is predicted that the indicator will decrease from -0.2% to -0.3% year-on-year, and from 0.0% to -0.1% quarter-on-quarter.


The GDP of Europe's leading economy has been declining smoothly since mid-2021.


This decline was preceded by a significant surge to 10% year-on-year. Such a sharp increase was caused primarily by the ECB's monetary easing measures aimed at overcoming the negative impact of COVID-19 restrictions.


The current decline in GDP is more of a compensation for the previous rapid growth. In essence, it is a return to average GDP values. But there is one thing: while German GDP fluctuated between +1% and 2.5% in the period from 2013 to the beginning of 2020 (year-on-year), it did not rise above 0.5% for the whole of 2023.


This suggests severe slippage in the eurozone's leading economy. Don't even ask about other European countries.


This low productivity rate puts downward pressure on the euro, including the EURUSD, as the ECB's hands are tied on measures to curb inflation by tightening monetary conditions.


Bundesbank and ECB representatives are scheduled to make a series of speeches today.


Speakers will include Bundesbank President Nagel, Vice President Buch and Bank representative Mauder. They will speak at 9 a.m. GMT.


ECB President Lagarde will also deliver a speech at 9 a.m. GMT.


At the same time, a current situation assessment and the German business climate index will be published.


In case of large deviations of these indicators from the forecast values, as well as the presence of sharp accents in the statements of politicians, high volatility in EURUSD is expected.


The lower target of wide fluctuations in EURUSD will be the level of 1.0825 and the zone below it.


The Overall Recommendation is to sell EURUSD with the target of 1.0825.


A loss should be fixed at the level of 1.0980.


This content is for informational purposes only and is not intended to be investing advice.

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