- The EUR/USD declines as German Imports plummet, while the pan-EU PPI continues to decline.
- The EUR/USD pair reached its lowest point in 12 weeks during Monday’s decline.
- The German Trade Balance has increased due to a significant acceleration in the decline of imports.
This past Monday, the EUR/USD pair experienced a further decline of 0.5%, which resulted in the pair reaching its lowest point in the past 12 weeks, which was close to 1.0723. The lack of confidence among investors was the cause of this decline, which was brought about by the uninspiring economic data from the EU.
The Organization for Economic Cooperation and Development (OECD) forecasts that inflation in Europe will continue to be higher than the target of 2% set by the European Central Bank until at least 2025. This projection will probably dampen the outlook for lower interest rates from the European Central Bank, which in turn will limit the potential for the Euro to appreciate.
We anticipate receiving the most recent Economic Bulletin from the European Central Bank (ECB) this week, in addition to the European Retail Sales data for December. Friday will mark the last event on the economic calendar with the release of the January Harmonious Index of Prices for Consumers (HICP) in Germany.
The EUR/USD Currency Pair Continues to Fall as Investors Search for Reasons to Purchase
- With a 6.7% decline in December, surpassing both the predicted -1.5% and the 1.5% seen in the previous month, Germany’s trade surplus soared to 22.2 billion dollars, and the country’s imports hit their lowest levels in years.
- In January, Germany’s HCOB Composite Purchasing Manager’s Index (PMI) experienced a decline, coming in at 47.0 instead of the expected 47.1.
- On Tuesday, we can expect the release of December’s euro area Retail Sales data. Analysts predict a slight improvement, with a projected decrease of -0.9% compared to the previous period’s -1.1%.
- Retail sales are projected to experience a more pronounced decrease of -1.0% compared to the previous month’s -0.3%.
- On Thursday, the latest Economic Bulletin from the ECB is expected to be released. If the document contains any clues about possible interest rate changes, investors will be watching it closely. Nevertheless, hope for a positive outcome in this regard appears to be dwindling.
- Friday concludes the European economic calendar with Germany’s January HICP inflation, which is predicted to remain unchanged at 3.1%.
The EUR/USD Pair Is Making an Attempt to Break Out of Chart Territory Near 1.0720
The EUR/USD currency pair lost more ground after starting the trading week around 1.0780, dropping to its lowest level in several weeks near 1.0720. The pair continues to move in a bearish direction below the 200-hour Simple Moving Average (SMA) and falls below 1.0840.
However, although the EUR/USD pair recovered on Monday, it is still significantly below the recent consolidation level, which is near 1.0850. The 200-day simple moving average marks this level. In addition, the pair is currently using previous technical backing derived from the swing low that occurred in December.
A downward test of the critical 1.0700 level is expected to occur in the EUR/USD pair, while on the upside, there is technical congestion that is waiting for potential buyers to take advantage of. The consolidation of the 200-day and 50-day simple moving averages near 1.0850 and 1.0900, respectively, is what causes this congestion to present itself.