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EURUSD Brushes Off Slowing Eurozone Growth

EURUSD Brushes Off Slowing Eurozone Growth

2018-05-15 09:35:00
Justin McQueen, Analyst
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EUR Analysis and Talking Points

  • EURUSD unfazed by Eurozone growth slowdown
  • Rising trade and geopolitical tension weighs on economic sentiment

See our Q2 EUR forecast to learn what will drive the currency through the quarter.

Slowdown in Eurozone Growth Confirmed

The Euro and DAX saw a largely muted reaction after a raft of Eurozone and German data points. Eurostat confirmed that Eurozone GDP for the first quarter of 2018 had slowed to 0.4% and 2.5%, which also follows the weaker than expected German growth figures reported earlier. Industrial production underperformed economic forecasts at 0.5% for March (Exp. 0.7%) and 3% for the year (Exp. 3.7%).

This data coincided with the German ZEW survey whereby the current conditions fell to 87.4 beating expectations of 86.2, while economic sentiment remained at -8.2. The survey noted that the US decision to quit Iran Nuclear deal and fears of further escalation of trade conflict with the US, alongside rising oil prices had a negative impact on expectations.

ECB Monetary Policy Path

Today’s data points are unlikely to cause significant rethink in regard to the ECB’s current monetary policy path as inflation remains the biggest concern for the central bank. Yesterday, the usually dovish council member Villeroy caught the market off guard after stating that the ending of QE is nearing, while also hinting of a rate hike next year.

EURUSD PRICE CHART: 1 HOUR TIME FRAME (DECEMBER 2017- MAY 2018)

EURUSD Brushes Off Slowing Eurozone Growth

Chart by IG

EURUSD Technical Levels

- Support: 1.1900, 1.1823 (YTD low), 1.1790 (76.4% Fibonacci Retracement of 1.1553-1.2556 rise).

- Resistance: 1.1996 (23.6% Fibonacci Retracement of 1.2556-1.1823 fall), 1.2000.

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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