Fundamental analytics

Weak statistical data from Europe limit the growth of the pair EUR / USD


The EUR / USD currency pair finished trading on Tuesday in the red zone, amid the publication of ambiguous statistics from Germany and the recovery of the dollar index.

The ZEW indices published yesterday in Germany as a whole indicate the prevalence of negative sentiments of large institutional investors regarding the prospects for the development of the country's economy, which significantly reduced the interest of traders in buying European currency.

On the contrary, the demand for the American currency increased due to the reduction of tension in the trade relations between the United States and China, after Donald Trump announced that soon the parties could still conclude a trade agreement.

This morning, preliminary data on German GDP growth were published, which turned out to be somewhat worse than market expectations, putting pressure on the EUR / USD pair. Quarterly GDP growth is 0.4%, which is in line with forecasts, but the growth of the annual indicator did not reach the forecast value of 0.7% and published 0.6%.

Later, preliminary data on EU GDP growth will be released, but economic statistics from the United States will probably have a stronger impact on the market. The focus will be on retail sales statistics. Experts predict growth in retail sales by 0.2% and growth in the basic sales index (not including car sales) by 0.7%. The release of stronger data can provide strong support to the dollar, since these indicators are important indicators of consumer spending and the pace of development of the American economy. Accordingly, weaker data can significantly reduce investor interest in the US currency by supporting the EUR / USD pair.

On the chart, we note that buyers could not keep the price above the level of 1.1210, which indicates a high probability of further development of the bearish movement in the direction of the 1.1180 mark. Therefore, longs should be considered only if the price fixes above 1.1215.

· Resistance levels: 1.1260, 1.1320, 1.1430.

· Levels of support: 1.1215, 1.1180, 1.1150.

The main scenario - a decline to 1.1180.

An alternative scenario - consolidation above 1.1215 and growth to 1.1260.

The market is still dominated by a moderately negative news background, which contributes to the development of a downward trend. Therefore, in the short run, it is worthwhile to give preference to shorts with the nearest entry points at the level of 1.1215.

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