Euro reclaims ground after German GDP

The euro is broadly unchanged against the US dollar after German GDP met expectations.

After EUR/USD dropped overnight, the euro was given a boost by Germany’s preliminary second quarter GDP reading of 0.7%, up from a flat reading for the same period in 2012.

The Dutch finance minister Jeroen Dijsselboem has become the second European minister to suggest that Greece will need another bailout. If more eurozone politicians believe the Athens administration will run out of money in 2014, the cost of borrowing for indebted eurozone nations would be likely to rise, which could weigh on the euro.

If this afternoon’s US consumer confidence and new home sales figures exceed expectations, traders could sell the euro and buy the dollar. Traders also remain cautious over the timing of the Federal Reserve’s tapering of its bond buying scheme, so if tapering fears escalate we could see EUR/USD fall.

Spot FX EUR/USD (DFB) chart

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