The euro continues to weaken this week, as the currency is down for a third successive day. Currently, EUR/USD is trading at 1.1894, down 0.30% on the day.
German ZEW Economic Sentiment rises
The euro remains under pressure, and even a strong outing from the German ZEW Economic Sentiment earlier in the day has failed to stem the currency’s slump. In March, the indicator rose to 76.6, up from 71.2 beforehand. This marked a fourth straight month of acceleration, pointing to stronger confidence in Germany’s economy from financial experts. The Eurozone ZEW reading showed a similar move, rising from 69.6 to 74.0.
The eurozone economy has been underperforming, and a sluggish vaccine rollout has not helped matters. With some EU members suspending the use of AstraZeneca shots due to adverse effects, the rollout has taken a step backward.
US retail sales figures in February were dismal, as consumer spending was sharply lower. The headline reading declined by 3.0%, while Core Retail Sales fell by 2.7%. Both readings were lower than expected and come after gains of above 5 percent in January. Still, the weak numbers did not faze investors. The massive US stimulus programme of USD1.9 trillion includes 1400 dollar checks for most Americans, and this should boost retail sales numbers in March.
Investors are keeping a close eye on the FOMC policy meeting on Wednesday. The Fed is widely expected to stick to its dovish script, but the market is showing interest in the dot plots, which is a signal of the Fed’s expectations of future interest rate levels. If the dot plot indicates that the Fed is contemplating raising rock-bottom rates earlier than expected, the US dollar could gain ground.
- EUR/USD is putting pressure on support at 1.1863. This line was tested last week. Below, there is support at 1.1772
- There is resistance at 1.2017, followed by resistance at 1.2080
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