DailyFX.com -
- Euro-Zone 1Q GDP to Expand Annualized 1.4%- First Slowdown Since 2Q 2014.
- Core Rate of Inflation to Slow to Annualized 0.9%.
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Trading the News: Euro-Zone Gross Domestic Product (GDP)
A downtick in the Euro-Zone’s Gross Domestic Product (GDP) accompanied by signs of weaker price growth may undermine the near-term advance in EUR/USD as it fuels speculation for additional monetary support.
What’s Expected:
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Why Is This Event Important:Even though the European Central Bank (ECB) sticks to its current policy in April, fears of a slowing recovery may push the Governing Council to further embark on its easing cycle in 2016 as President Mario Draghi and Co. struggle to achieve their 2% target for inflation.
Expectations: Bearish Argument/Scenario
| Release | Expected | Actual |
| Markit Purchasing Manager Index- Composite (APR P) | 53.3 | 53.0 |
| Trade Balance s.a. (FEB) | 21.5B | 20.2B |
| Industrial Production s.a. (MoM) (FEB) | -0.7% | -0.8% |
Waning business outputs paired with the slowdown in global growth may generate a dismal GDP report, and a marked slowdown in the growth rate may dampen the appeal of the single-currency as market participants boost bets for additional ECB support.
Risk: Bullish Argument/Scenario
| Release | Expected | Actual |
| M3 Money Supply (YoY) (MAR) | 5.0% | 5.0% |
| Retail Sales (MoM) (FEB) | 0.0% | 0.2% |
| Employment (QoQ) (4Q) | -- | 0.3% |
Nevertheless, the pickup in household spending along with the ongoing expansion in private-sector lending may foster a better-than-expected growth figure, and a positive development may prompt the Governing Council to carry a wait-and-see approach into the second-half of the year as the economic outlook improves.
How To Trade This Event Risk(Video)
Bearish EUR Trade: GDP & CPI Report Highlight Slowing Recovery
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Need red, five-minute candle following the policy statement to consider a short EUR/USD trade.
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If market reaction favors a bearish Euro trade, sell EUR/USD with two separate position.
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Set stop at the near-by swing high/reasonable distance from cost; need at least 1:1 risk-to-reward.
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Move stop to entry on remaining position once initial target is met, set reasonable limit.
Bullish EUR Trade: Growth , Inflation Figures Exceed Market Expectations
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Need green, five-minute candle to favor a long EUR/USD trade.
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Implement same strategy as the bearish euro trade, just in the opposite direction.
Potential Price Targets For The Release