The euro has started the week in positive territory. Currently, EUR/USD is trading at 1.1847, up 0.45% on the day. On the fundamental front, the focus will be on German numbers on Tuesday, with the release of Final GDP and Ifo Business Climate.
German GDP decline hits double digits
German GDP plunged 10.1% in the second quarter and the second estimate is expected to confirm this double-digit swoon. The eurozone’s number one economy has been hit hard by the Covid-19, as German consumer spending and exports were down sharply in the second quarter. The euro posted gains against the US dollar in Q2, but this is more a result of greenback weakness rather than solid underpinnings on the part of the euro. The sharp contraction in German GDP is a sober reminder that the eurozone economy remains in poor shape, and the euro could see rougher waters ahead.
Also on Tuesday, Germany releases Ifo Business Climate. The business sector is showing stronger confidence, as the indicator has accelerated over three successive months. In July, business confidence rose to 90.5, up from 86.2 beforehand. The estimate for August stands at 92.5.
EUR/USD posted small gains in the Asian session and this trend has continued in European trade
- 1.1868 is the next resistance line, followed by resistance at 1.1939
- 1.1811 is a weak support line. Below, there is support at 1.1740
- The 10-day MA line remains relevant and is situated very close to the pair
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