Euro and German GDP Growth:
- German economy grew 1.5% in 2018, down from 2.2% in 2017.
- EURUSD remains under downside pressure ahead of EU inflation release.
EURUSD Touches a One-Week Low as German Economy Slows
The German economy expanded by 1.5% in 2018, sharply lower than the 2.2% increase recorded in 2017, according to preliminary data released by the Federal Statistics Office earlier today. The data suggests that German Q4 growth was positive after contracting by 0.2% in the third quarter, although this is likely to be marginal, while today’s annual number may be revised going forward. This lack of growth in the second-half of 2018 is likely to roll-over into 2019 and will weigh on the single currency, crimping the ECB’s ability to tighten monetary policy later in the year. The recent run of weak Euro-Zone data continues to undermine the Euro, and this may continue Wednesday and Thursday when Germany and the EU release their latest inflation figures.
EURUSD currently remains capped by the 200-day moving average, currently situated at 1.1537, and is trading at a one-week low. The pair have also just broken below the 20-day moving average around 1.1435 and may make a fresh attempt at the 50-day ma at 1.1392 in the short-term. Below here 1.1300 heaves into view, a level that has seemingly been defended on a handful of occasions from mid-August onwards. A break and close below this level may prompt fresh attempts at 1.1265 and the 18-month low made on November 12 at 1.1215.
EURUSD Daily Price Chart (June 2018 – January 15, 2019)
IG Client Sentiment Datashows investors are currently 53.8% net-long, a bearish contrarian indicator. However recent daily and weekly positional shifts give us a stronger bearish trading outlook.
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