EURUSD
EURUSD has tumbled to a 1-week low at 1.1422 after Germany posted the slowest growth rate in the past 5 years.German GDP growth slowed to 1.5% in 2018 from 2.2% in 2017. The low extended the decline from the 3-month peak seen at 1.1570 last week.
The high was seen following a cacophony of Fed speakers which communicated hawkish-to-neutral shift in the policy stance. Since then, concerns about a slowing Eurozone economy have weighed on EURUSD. Immediate Support remains at 200-period SMA and S3, at 1.1420. The next Support is at 1.1390, which marks the prevailing situation of the 50-day SMA, while Resistance comes in at 1.1450. Bigger picture, the pairing has been plying a broadly sideways path for nearly three months now, roughly centred on 1.1400.
The Eurozone posted a sa trade surplus of EUR 15.1 bln in November, up from EUR 13.5 bln in the previous month. Data point to a negative contribution from net exports to overall growth last year, which highlights the impact of geopolitical tensions and the slowdown in the automobile sector and ties in with the marked deceleration in German GDP growth last year.
Meanwhile, President Draghi is about to make its 1st appearance for 2019. The testimony is likely to add pressure of Euro. Draghi faces tough questions as data weakens before testimony.
For the ECB, Brexit uncertainty ahead of today’s vote in London and yesterday’s dismal production numbers are adding to the growing number of risks that are threatening to derail the outlook for the Eurozone economy. So far the official line remains that the basic scenario remains intact, which is also likely to be Draghi’s position at the presentation of the central bank’s annual report today in Strasbourg, which will mostly be backward looking and also serve to justify the decision to phase out QE.
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Andria Pichidi
Market Analyst
HotForex
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