Euro Outlook: Watch Out for Political Hurdles
EUR price, news and analysis:
- Political problems in Spain and Italy could trap Euro bulls.
- Stagnating growth in the Eurozone is another potential snare.
- However, the downside could be limited as much of the bad news is arguably in the price already.
Euro hazards ahead
EURUSD has traded broadly sideways between 1.1235 and 1.1359 for nearly two weeks now but traders should keep an eye on political developments in Spain and Italy as well as growing signs of economic weakness in the Eurozone.
EURUSD Price Chart, Hourly Timeframe (February 8-20, 2019)
Chart by IG (You can click on it for a larger image)
In Spain, snap Parliamentary elections called for April 28 could well result in stalemate, with all the main political parties jostling to form a ruling coalition. There is also political instability in Italy, which is currently led by a populist and Euro-skeptic Government.
At the same time, economic growth data have shown Italy in a technical recession while Germany escaped recession by only a whisker in the final quarter of last year.
However, this will not necessarily mean Euro weakness ahead as arguably both the Eurozone’s political and economic woes are already priced in to the EURUSD pair and Euro crosses, potentially limiting the downside.
On the economic front, the next hurdle will be advance Eurozone consumer confidence data for February, due Wednesday at 1500 GMT. Analysts are expecting a marginal improvement in confidence to -7.7 from -7.9 in January and a worse figure than that would underline economic concerns for the bloc.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.