German Business Confidence misses estimate

EUR/USD is taking a pause after ending the week with strong gains. In the European session, EUR/USD is trading at 1.2074, down 0.19% on the day.

The euro continues to take advantage of a US dollar in retreat and gained close to 1.0% last week. April has been kind to the euro, which has jumped 2.94% and recovered all of the losses sustained in March. With US yields depressed, the dollar is having trouble gaining traction.

Manufacturing remains a bright spot in the eurozone economy, and robust PMI helped boost the euro, which gained 0.68% on Friday, its best one-day performance since early February. The German and eurozone Manufacturing PMIs both outperformed, with readings of  66.4 and 63.3, respectively. These figures point to strong growth.

In Germany, the largest economy in the bloc, the Ifo Business Climate index improved to 96.8 in April, little changed from 96.6 a month earlier. However, this missed the forecast of 97.8, disappointing the market and putting some pressure on the euro.

German consumer confidence has yet to find its feet, as German GfK Consumer Climate has not posted a reading in positive territory since March 2020, when the Covid-19 pandemic hit Europe. The German consumer has limited her spending, and the lockdowns have kept many businesses and services shut. This has taken a toll on the economy, and GDP for Q1 is expected in at -1.5%. The services sector continues to struggle, as March PMIs for France, Germany and the eurozone were just above the neutral 50 level, which indicates that services are stable but not expanding.

Investors will be keeping a close eye on the FOMC meeting on Wednesday (18:00 GMT). The Federal Reserve has insisted that it will not stray from its dovish stance, but as the economy heats up and inflation moves higher, the market will be looking closely for any clues about tapering QE.

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EUR/USD Technical

  • EUR/USD faces resistance at 1.2151, followed by resistance at 1.2204
  • On the downside, there is support at 1.1994, protecting the symbolic 1.20 line. The next support level is 1.1890

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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