The euro was trading lower for a second straight session as German IFO business climate indicator unexpectedly declined in April. German business leader’s confidence in the eurozone economy took a turn for the worse, dropping to 99.2 in April, from 99.7 in March and missing expectations of 99.9.
Confidence has now declined in seven out of eight months and has fallen as manufacturing has also markedly deteriorated. Weakness in Europe’s largest economy is being reflected in the data. Today’s stats combined with yesterday’s weakening consumer confidence for the eurozone is painting a gloomy picture for the bloc.
With Germany’s GDP slashed to just 0.5% down from 1% and inflation for the bloc at 1.4% the ECB will be in no rush to start hiking rates anytime soon. US data on the other hand is showing signs of a resilient economy with retail sales and new home sales surprising to the upside.
The dollar is once again dominant, leaving the EUR/ USD struggling with $1.12 and under pressure. EUR/USD trades below the 50, 100 and 200 simple moving averages. Momentum is clearly to the downside and the RSI is leaning lower. Near term support can be seen at $1.1205. A break through here could open the doors to $1.1185 followed by $1.1175, the lowest point so far this year.
On the upside $1.1230 serves as a near term cap beyond which $1.1260/5, this week’s high could also act as a resistance.
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