German GDP Preview: EUR/USD may extend its falls

Initial German GDP figures for the second quarter will likely show a considerable drop in output due to the coronavirus crisis. Alongside some dollar strength, EUR/USD has more room to drop than rising, FXStreet’s analyst Yohay Elam reports. 

Key quotes

“Economists expect the old continent's largest economy to report a fall of 2.2% in GDP in the first quarter of 2020, the worst since Q1 2009 – the worst of the financial crisis.”

“EUR/USD has been leaning lower, and this trend may extend if Germany's GDP misses expectations. The mix of weak eurozone data and a stronger dollar could push EUR/USD lower.”

“If German GDP meets expectations, it would be encouraging for the euro area, as the largest country would have posted better figures than other large economies and the bloc at large. Nevertheless, USD strength will likely prevent EUR/USD from advancing.”

“The currency pair has room to rise only in the unlikely scenario of an upside beat, preferably contraction of less than 2%. A surprising outcome would boost EUR/USD, at least temporarily.”