EURUSD: Germany and U.S. GDP key data of the day
This morning we will be watching for key German unemployment rate data to strongly mark the direction of the euro. Eurozone lending, mortgage and capital creation data, as well as other economic data from different countries in the Eurozone. In the afternoon, monthly unemployment data will be released, as well as US GDP growth among other US market data, which will directly affect all US dollar pairs.
If we understand the current economic context, the Eurozone is under pressure, and the ECB is determined to combat the superinflation caused by too much debt issued to cover all the capital issued. The Eurozone is suffering from a rate hike and an energy crisis that is taking its toll on the entire Eurozone. Germany is expected to grow by 0.1% this year, which can be considered as stagnation rather than growth, as Germany is highly dependent on exports. The slowdown in all Eurozone economies and their bleak growth prospects in the coming quarters are going to support the ECB having to cut rates, even though they are not committed until June, similar to what Powel reported in his last Fed reports. The 2% path looks like the target to be met on both sides of the sea.
Spanish inflation figures confirmed a rebound, which looks disastrous, marking a rise in consumer prices as the government continues to cut spending on subsidies that limited such increases in part because of the unbearable burden of energy prices. In other words, Europe is having a hard time correcting this inflation towards 2% at the moment. That is why the EURUSD pair remains in a sideways range for quite some time. Only robust GDP data in the Eurozone could break out of the hot zone and support the bulls to break out of this sideways range.
If we look at the picture on the chart, we can see how the price of the dollar has been contained multiple times since December, touching a floor at the end of February. This has kept it as a carry-trade currency, as has the Japanese yen. This may be making it easier for the German Dax market to sustain upside as it has, with U.S. investors diversifying their risk in Oscar Mayer sausage country. At the moment you can see how the bell zone is very pronounced at 1.07831, as we say the 1.08 area is going to be the strongest trading area for a long time to come, so it could be taken as the epicenter for the sideways range moves that can be forecast. At the moment, the short ceilings are at 1.10 and 1.68 and the longer range ceilings are almost at 1.11 and 1.045. If the outlook for the euro zone improves, it would obviously continue the bullish process of the euro to a stronger price zone. Although it is going to be hard to see a strong euro for a long time.
Ion Jauregui - Analyst AT
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The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
If we understand the current economic context, the Eurozone is under pressure, and the ECB is determined to combat the superinflation caused by too much debt issued to cover all the capital issued. The Eurozone is suffering from a rate hike and an energy crisis that is taking its toll on the entire Eurozone. Germany is expected to grow by 0.1% this year, which can be considered as stagnation rather than growth, as Germany is highly dependent on exports. The slowdown in all Eurozone economies and their bleak growth prospects in the coming quarters are going to support the ECB having to cut rates, even though they are not committed until June, similar to what Powel reported in his last Fed reports. The 2% path looks like the target to be met on both sides of the sea.
Spanish inflation figures confirmed a rebound, which looks disastrous, marking a rise in consumer prices as the government continues to cut spending on subsidies that limited such increases in part because of the unbearable burden of energy prices. In other words, Europe is having a hard time correcting this inflation towards 2% at the moment. That is why the EURUSD pair remains in a sideways range for quite some time. Only robust GDP data in the Eurozone could break out of the hot zone and support the bulls to break out of this sideways range.
If we look at the picture on the chart, we can see how the price of the dollar has been contained multiple times since December, touching a floor at the end of February. This has kept it as a carry-trade currency, as has the Japanese yen. This may be making it easier for the German Dax market to sustain upside as it has, with U.S. investors diversifying their risk in Oscar Mayer sausage country. At the moment you can see how the bell zone is very pronounced at 1.07831, as we say the 1.08 area is going to be the strongest trading area for a long time to come, so it could be taken as the epicenter for the sideways range moves that can be forecast. At the moment, the short ceilings are at 1.10 and 1.68 and the longer range ceilings are almost at 1.11 and 1.045. If the outlook for the euro zone improves, it would obviously continue the bullish process of the euro to a stronger price zone. Although it is going to be hard to see a strong euro for a long time.
Ion Jauregui - Analyst AT
*******************************************************************************************
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.