EUR Outlook Turns Softer; GDP Data out of Germany, France and Eurozone to be Keenly Watched

The very latest short-term forecast issued by Trading Central says:

"Our preference: SHORT positions at 1.3355 with 1.329 & 1.326 as next targets.

"Alternative scenario: The upside penetration of 1.3365 will call for 1.339 & 1.3415.

"The pair has broken below a rising trend line and remains under pressure."

The medium-term outlook for the Euro does however look a shade more positive.

Geoffrey Yu at UBS says he is bullish on EUR/USD:

"Risk remains for a short-term correction from the key resistance at 1.3417. Support is at 1.3270. A break above 1.3417 would be positive."

A busy week for the Eurozone: GDP data is key driver

The Euro is to be particularly prone to event risks in the Eurozone this week with the outlook being dominated by the release of preliminary Q2 GDP figures for Germany, France and the eurozone.

"The increasing strength of the single currency region has been exhibited recently through better than expected PMI figures, along with the Italian GDP figure. Subsequently, the core growth figures from the two main constituent economies followed by the eurozone as a whole has the ability to provide a further boost this week," says Joshua Mahony at Alpari UK.

Estimates are for a push into growth for France, with a median of 0.1% being predicted after the previous figure of -0.2%. Meanwhile the German figure is expected to rise from 0.1% to 0.6%, which would represent the highest rate of growth in nine months. Finally, market estimates point towards the eurozone growing for the first time in seven months, with a 0.4 rise from 0.2% to 0.2% being touted.

"Overall, we want to see a consistent picture across all three GDP releases, and if all goes to plan Wednesday could be a highly significant day for the eurozone after the troubles seen throughout this crisis," says Mahony.

The other important release in the eurozone will come in the form of the German ZEW economic sentiment figure, released on Tuesday. Given the importance of the German economy in driving the single currency forward, it is this survey which is more commonly watched than the eurozone measure.

Market expectation is for a positive reading of 40.3 from last month’s 36.3. It is worth noting that this figure has disappointed regularly, with four of the last five readings coming in below estimates. Thus this figure can bring volatility simply by surprising the markets.