- The pair loses the grip and retreats to the 1.1480/75 band.
- EMU flash GDP expected at 0.2% QoQ in Q4.
- Italy expected to slip into recession in Q4.
The correction lower around the European currency is now picking up pace and is dragging EUR/USD to test daily lows in the proximity of 1.1470.
EUR/USD offered on EMU data
Spot came under further selling pressure after Italian preliminary GDP figures now see the economy entering into recession in the October-December 2018 period. In fact, flash Italian Q4 GDP figures came in at -0.2% QoQ and 0.1% YoY.
In the broader euro bloc, advanced GDP readings see the economy expanding 0.2% inter-quarter and 1.2% over the last twelve months during the last three months of 2018. Additionally, the jobless rate stayed put at 7.9% in December.
The pair gave away part of the overnight advance beyond 1.1500 the figure in the wake of the data releases, although decent support so far emerged in the 1.1480/75 band.
What to look for around EUR/USD
USD-dynamics will drive the sentiment in the pair in the very near term, showing some upside potential in response to the now neutral stance from the Federal Reserve. However, fundamentals in the euro region are not something to write home about and this carries the potential to weigh on the single currency in the next months. Politics in Euroland will also be a factor to have in mind, with EU parliamentary elections coming up in May and investors closely following the social scenario in France and populist developments in Italy.
EUR/USD levels to watch
At the moment, the pair is gaining 0.05% at 1.1485 facing the next up barrier at 1.1514 (high Jan.31) seconded by 1.1515 (50% Fibo of the September-November drop) and finally 1.1569 (2019 high Jan.9). On the flip side, a breakdown of 1.1446 (100-day SMA) would target 1.1388 (55-day SMA) en route to 1.1323 (200-week SMA).
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