EUR/USD: Euro-zone’s economy contracted at its sharpest pace in 1Q 2020

EUR/USD: Euro-zone’s economy contracted at its sharpest pace in 1Q 2020

EURUSD Movement

For the 24 hours to 23:00 GMT, the EUR rose 0.13% against the USD and closed at 1.0818 on Friday.

On the macro front, Euro-zone’s gross domestic product (GDP) slid 3.8% on quarterly basis in first quarter of 2020, marking its biggest fall since the series started in 1995 and compared to a rise of 0.1% in the previous quarter. The preliminary figures had indicated a fall of 3.8%. Additionally, seasonally adjusted trade surplus narrowed to €23.5 billion in March, compared to a surplus of €25.6 billion in the previous month. Separately, Germany’s GDP dropped 2.2% on quarterly basis in first quarter of 2020, recording its biggest fall since 2009 and in line with market forecast. In the prior quarter, GDP had recorded a revised fall of 0.1%. Moreover, the producer price index fell 0.7% on a monthly basis in April, more than market expectations for a drop of 0.6% and compared to a fall of 0.8% in the previous month.

In the US, the Michigan consumer sentiment index unexpectedly rose to 73.7 in May, defying market expectations for a drop to a level of 68.0 and compared to a reading of 71.8 in the prior month. Additionally, the NY Empire State manufacturing index advanced to -48.5 in May, more than market expectations for a rise to a level of -63.5 and compared to a reading of -78.2 in the earlier month. Moreover, industrial production plunged 11.2% on a monthly basis in April, amid the COVID-19 pandemic and less than market expectations for a drop of 11.5%. In the previous month, industrial production had recorded a revised drop of 4.5%. Meanwhile, retail sales slumped 16.4% on a monthly basis in April, more than market expectations for a drop of 12.0% and compared to a revised fall of 8.3% in the prior month. Furthermore, business inventories fell 0.2% in March, in line with market consensus and compared to a revised drop of 0.5%.

  Trade Review: GBP/NZD Support Break

In the Asian session, at GMT0300, the pair is trading at 1.0825, with the EUR trading 0.06% higher against the USD from Friday’s close.

The pair is expected to find support at 1.0792, and a fall through could take it to the next support level of 1.0760. The pair is expected to find its first resistance at 1.0854, and a rise through could take it to the next resistance level of 1.0884.

In absence of crucial macroeconomic releases in the Euro-zone today, investors would keep a close watch on the US NAHB housing market index for May, slated to release later today.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

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