Eur/usd - page 514
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The single currency marked steady growth on Monday amid the negative result on the Italian referendum and the positive data on retail sales in the eurozone. The euro added 116 pips to 1.0763 and reached highest level at 1.0795. 1.0505 acted as support which technically led the EUR/USD pair to third consecutive day of increase. Bulls are now encouraged and next target appears to be 1.0820.
Eurozone Q3 GDP Growth Confirmed At 0.3%
Eurozone third-quarter GDP growth was confirmed at 0.3%, unchanged from the previous estimate and in line with market expectations.
There was a small upward revision in annual growth to 1.7% from the previous estimate of 1.6% and the annual rate has held at 1.7% for the past three quarters.
The increase in consumer spending strengthened slightly to 0.3% from 0.2% previously, with government spending also recording a slightly stronger increase at 0.5% from 0.4% in the second quarter.
There was a small negative contribution from trade with subdued readings for both imports and exports, while growth in investment slowed to 0.2% from 1.2% in the second quarter.
There was solid growth of 0.7% in the Netherlands for the third successive quarter with the annual rate at 2.4% from 1.8% previously and all of the countries reporting data recorded positive GDP growth for the quarter.
The data will not have a significant impact on near-term policy trends. The crucial element will be whether the Eurozone economy can break out of the underlying weak growth trend under the influence of a very accommodative monetary policy. There is tentative evidence that there will be a significant acceleration for the fourth quarter of 2016, which would underpin confidence in the outlook.
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EUR/USD is seen flirting around 1.0800 which is also acting as an immediate resistance for the pair. If the rally extends beyond it, the pair can en-route to its next major hurdle of 1.0850. On the downside, 1.060 can be taken as immediate support to defend. If it is broken we could see it coming under selling pressure with next level to watch is 1.0545-50. Attention is paid to ECB meeting due on Thursday for further clarity in pair’s direction.
The posistive GDP data in the euro zone couldn’t support enough the euro during yesterday’s trading and session closed 47 pips lower to 1.0716. Currently the EUR/USD is trading sideways above 1.07 mark. A break above 1.0746 would lead the pair to test 1.08 levels. Support is seen at 1.0694.
EUR/USD Holding Steady Following Tuesday’s Setback
EUR/USD pulled back from Monday’s intraday high during Tuesday’s session and is currently holding steady near Tuesday’s low, trading at the 1.0722 level, up 0.04%.
The recent advance stalled in the vicinity of the 38.2% retracement level of the decline from the November closing high. Given the test of this level of resistance and the overbought condition of EUR/USD, a period of correction appeared likely to unfold.
Support for the pair is at the 1.0688-1.0680 zone. Holding this area would leave the pair well-positioned to resume the recovery rally, while a drop back below this level would leave EUR/USD at risk for a return to the November lows.
On a further move to the upside, resistance above the recent rally high at 1.07966 comes in at the 50% retracement of the November decline near the 1.08327 level, which is in the same vicinity as the corrective bottom established in the latter part of October.
The key risk event this week in the Eurozone is the European Central Bank policy decision on Thursday at 07:45 EST. Bank President Draghi will hold his regular press conference 45 minutes later. This ECB meeting will be very important for underlying Euro sentiment. The bank has promised that there will be an announcement on the future of the bond-buying program which, at present, is due to continue until March 2017.
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