EURUSD traders will start early Monday with German GDP numbers released in the Asian session.
The year-on-year flash estimate is expected to remain at 1.3% annual growth but may deviate.
EURUSD – Daily Chart
EURUSD has seen two small negative days as it continues to hover above 1.08, and the pair lacks a clear trend in the last 1-2 weeks. The GDP number could drive a pullback to the 1.06 level if it comes in less than expected.
According to the government, Germany should avoid a recession this year as Europe’s largest economy recovers from the turmoil created by the conflict in Ukraine. Industrial powerhouse Germany is expected to see a growth of 0.2% in 2023, the economy ministry said in its latest projections. In October, when fears were rising about soaring energy costs, Berlin feared a contraction of 0.4% in 2023.
“The government has fended off the economic crisis,” Chancellor Olaf Scholz said. “We have shown what we are capable of.”
Massive government stimulus put a cap on energy costs for households and businesses after Russia cut natural gas deliveries last year. Alongside efforts to alter supplies, Berlin released a 200-billion-euro support package.
Mild winter weather and lower wholesale gas prices have boosted confidence that the expected downturn will not be as bad.
“The crisis is not over,” Economic Minister Robert Habeck told a press conference. “But we have been able to avoid the worst scenarios,” he said, as he talked of the “extreme adaptability” shown by German firms.
Habeck said the country may still suffer a technical recession but would see growth increase as the year progresses.
EURUSD faces a big week ahead with German unemployment, Eurozone GDP, and an FOMC interest rate meeting later in the week, which will determine the exchange rate’s path.
