EUR/USD is trading quietly on Friday. In the European session, EUR/USD is trading at 1.1812, up 0.06% on the day.
Eurozone GDP bounces back in Q3
The Covid-19 pandemic caused a massive economic downturn in the second quarter across the globe. The major economies reported sharp contractions in the economy, as lockdowns and weak global demand formed a deadly 1-2 punch, which resulted in double-digit losses in GDP. However, with the relaxation of health restrictions and stronger global demand, we have seen a nice rebound in the GDP reports in the third quarter in the US, the UK and elsewhere. Friday was the turn of the eurozone, as GDP climbed 12.6% in Q3, just shy of the forecast of 12.7%. This marked an impressive rebound after a reading of -12.1% in the second quarter.
Other eurozone data was also positive. Employment Change gained 0.9% in Q3, above the forecast of 0.7%. This follows a decline of 2.8% in Q2. As well, the eurozone’s trade surplus widened to EUR24.0 billion in September, up from EUR21.9 billion beforehand. This beat the estimate of EUR22.3 billion and was the highest surplus since February.
The news of a vaccine breakthrough by Pfizer earlier in the week sent the stock markets higher, as investors cheered the news that finally, there is light at the end of the dark Covid-19 tunnel. However, the ECB wasn’t in a celebratory mood, as ECB President Lagarde noted that even with a Covid-19 vaccine, the economic recovery in Europe might be stop-and-start rather than linear. Lagarde said that further monetary easing could be implemented at the ECB’s policy meeting in December. She did not rule out an interest rate cut, which would likely send the euro lower. The ECB could also opt to increase the Pandemic Emergency Purchase Program rather than lower rates. In any event, Lagarde’s somber message has been picked up loud and clear by the markets, which are now prepared for a “live” ECB meeting, which could prove to be very lively, indeed.
- EUR/USD tested 1.1832 in the Asian session. The next resistance line is at 1.1860
- There is support for the pair at 1.1768, followed by a support line at 1.1732
- The 50-day MA line remains relevant, situated slightly below the pair
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