EUR/USD is well-positioned to take advantage of better than expected German GDP

Germany is expected to report a drop of 1.5% in output in the first quarter of 2021. In the view of FXTStreet’s Analyst Yohay Elam, the publication of German GDP looks like a "win-win" situation for EUR/USD bulls as expectations may be too low and amid the currency pair's upside momentum. 

Low expectations open the door to EUR/USD gains

“Europe's "locomotive is releasing Gross Domestic Product figures for the first quarter of the year, and economists expect a squeeze of 1.5%. That data is set to rock the euro and overshadow eurozone GDP data released later on Friday.”

“The euro is the currency market's ‘comeback kid’ – brushing off concerns about a slow immunization effort. Moreover, with the US Federal Reserve extending its bond-buying scheme for longer, the euro benefits from dollar weakness and from the broad risk-on sentiment. Therefore, it would only take a minor beat of expectations to jolt EUR/USD higher.”

“In case this analysis is wrong and German GDP disappoints with -1.5% or even -2%, there is also a good chance that investors would shrug it off. The figures are for the quarter that ended in March and both vaccination and economic activity have substantially picked up in April. Markets tend to look forward – especially when the bias is in favor of further gains.”

 

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