EURO, Eurozone economy & EUR/USD trending point
- Wednesday’s (the 27thof February) business confidence figure for eurozone revealed that the bloc’s economy is struggling to expand
- Despite a downbeat eurozone business morale, EUR/USD pair is trading higher, and gathering pace, mostly catapulted by another dovish speech by Federal Reserve Chair Jerome Powell
- Yesterday’s (the February of 26th) Powell speech indicated a solid but weakening US economy which ultimately forced fed to hold on to their dovish stance and a much-softer American Dollar had winded a bull-run for both EUR and GBP.
EUR overlooked Eurozone confidence data, cruising ahead despite poor outlook
According to the latest Eurozone sentiment data released on Wednesday (February 27th), in February, business confidence in the Eurozone remained poor and the bloc’s headline business weather index stayed unchanged from January at 0.69, while economic and industrial sentiments fall amid increased turbulence ahead of a Brexit and multiple European election including the EU commission election due to held on May, 2019. Today’s data had revealed that the Eurozone business confidence had been drowned to a new two year low, after falling for eight straight eight months in a row. Technically, the data should affect the Eurozone currency, however Euro remained upbeat and gained instead leaning towards further doom, as a much-weaker USD catalyzed by dovish Fed had been dominating the market trend.
EUR/USD hourly price chart (February 11thto February 27th)
Despite lack of growth in the Eurozone economy, the EUR had been trading at 1.1385 during preparation of the report after retesting 1.14 after more than one month. However, it is likely for the American dollar to be dovish for the most part of the year, as forecasted by Fed Chair Jerome Powell.
Given Powell’s downbeat sentiment towards the United States economy, EUR/USD pair would likely to gain further, wheezed by a fresh whisper of a sluggish United States economy.
There might have been multiple factors indicating a bearish pattern for Euro, including a basket of poor earnings reports and PMI indexes from eurozone economy.
According to recent data released by the EU commission, the Euro Kingpin Germany had narrowly averted a recession a week earlier, while Italy had been technically in a recession, with France and Spain not far behind. German GDP was also contracted by 0.2 percent in the first quarter of 2019, alongside UK.
Despite all of the disdainful data, distressing market sentiment, the Euro had been hovering above its initial resistance level and a daily closure above 1.1410 would likely to jolt the currency above 1.15 region, however, it is highly unlikely for Euro to break its recent trend of trading between 1.12-1.15, set onwards from mid-October last year.
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[Disclaimer: The content of this article is personal opinion and should not be considered as investment advice or suggestion towards any trading activity.]