EUR Weakens on German GDP

EUR/USD analysis

• Information on euro area inputs is mixed and does not provide firm guidance on the path forward.
• Germany’s Ifo Business Environment Report and ECB officials in the spotlight.
• EUR/USD is firm on expectations of fundamental catalysts.

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Basic background of the euro

Yesterday, on Thanksgiving Day, the euro rose against the US dollar after Eurozone PMI statistics showed some improvement, albeit still below. 50 Threshold that distinguishes between contraction and expansion. The results of the European Central Bank (ECB) Monetary Policy Meeting were also released yesterday, highlighting the uncertainty and data dependence of the market ahead of raising interest rates if necessary. Meanwhile, opinions from ECB officials are mixed, and it will be interesting to see what impact today’s speakers will have on the overall rhetoric.

German GDP statistics released early this morning (see economic calendar below) show the country has fallen into its first quarter of negative growth since Q4 2022 (amplifying recession fears), with year-on-year statistics showing It was less than expected. As Germany is the eurozone’s largest economy, it is often used as a measure of the health of the eurozone as a whole. On this day, there was some bias in Germany’s IFO economic trends and in the eurozone statistics from ECB officials, including President Christine Lagarde. The trading day ends with US PMI, but volatility is likely to be subdued as the Thanksgiving hangover still lingers.

Economic calendar (GMT+02:00)

Source: Refinitiv

Today’s options expiry shows the largest percentage before and after. 1.0800 A handle that may weaken the pair’s trading as it approaches expiration. Looking at the interest rate probabilities (see table below), there is little change as the market believes current levels are the peak of the rate hike cycle, with rate cuts expected to begin around June 2024.

EUR/USD:1.0800 (EU1.18b), 1.0925 (EU925 million), 1.1000 (EU759.1 million)

ECB interest rate probability

Source: Refinitiv

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technical analysis

EUR/USD daily chart

chart creator Warren BenketasI.G.

The daily chart of EUR/USD is yet to turn higher after breaking out of the overbought zone of the Relative Strength Index (RSI). 1.0900 Physiological handle. Recent price action shows that EUR/USD traders are hesitant ahead of next week’s inflation data.

Resistance level:

Support level:

IG client sentiment data: mixed

IGCS shows retail traders are currently neither. net short In EUR/USD, 57% Number of traders currently holding long positions (as of this writing).

Download our latest sentiment guide (below) to see how daily and weekly position changes affect EUR/USD sentiment and outlook.

Contact and follow Warrenon on Twitter:@Wenketas