- EUR/USD has been on the back foot amid US dollar strength, digesting German GDP.
- US consumer data and Sino-American relations stand out later in the day.
- Friday's four-hour chart is pointing to further falls below the broken support line.
"Indicators in April do not show signals of hope" – the words of Germany's economic ministry put the relatively moderate drop in output in proportion. Europe's largest economy has reported a drop of 2.2% in Gross Domestic product, in line with expectations and better than the continent's average. The publication is helping keep EUR/USD above 1.08.
Eurozone figures are due out shortly and are expected to slightly shift in response to Germany's figures. The initial read showed a drop of 3.8% in output.
The focus then moves to the US shopper. Around 70% of the world's largest economy is centered on consumption, and the read for April – a full month of lockdown – will likely be devastating. After holding up in March, the core of the core Control Group is forecast to drop as well, while headline sales carry expectations for a double-digit fall. The publication is the most significant release of the week:
US Retail Sales April Preview: As bad as can be but still expected
US industrial production statistics for April are also projected to show a drop and economists also predict the preliminary Consumer Sentiment Index to edge lower. However, the University of Michigan's confidence measure may also surprise to the upside, amid reopenings in several states.
See US Consumer Sentiment Preview: The triumph of hope over experience?
The dollar has stabilized in anticipation of these critical US figures and also amid opposing forces. The safe-haven greenback benefited from growing Sino-American tensions. President Donald Trump stated that the era of globalization is over and wants to bring supply chains home from China. Moreover, he refuses to speak to his Chinese counterpart Xi Jinping. Trump also advocated a stronger dollar, a shift from his previous stance, complaining about it.
On the other hand, Senate Republicans are open to another stimulus plan, potentially including another cheque to every American. The White House rejected House Democrats' $3 trillion plan, but do not outright object new expenditure.
Jerome Powell, Chairman of the Federal Reserve, called on elected officials to do more. Earlier in the week, he pushed the dollar higher by rejecting negative interest rates
More: Unprecedented gloom of Mr. Powell will have long-lasting effects
EUR/USD Technical Analysis
-637251271742702276.png)
Euro/dollar has fallen off the uptrend channel and attempts to recapture it have failed. The currency pair also trades below the 50, 100, and 200 Simple Moving Averages, but momentum has stabilized.
All in all, bears are in the lead but are far from having full control.
Support awaits at 1.0780, which has been a low point several times in May, and more importantly by 1.0765, the monthly low. Further down, 1.0730 and 1.0640 await.
Looking up, 1.0820 capped recovery attempts and the 50 SMA is approaching this price. The next line to watch is 1.0870, a swing high from last week, and then 1.0890, a stubborn cap in April. 1.0925 and 1.0970 are next.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.