EURO/USD Performance: Euro Experiences An Uptick As Eurozone GDP Surpasses Estimates
The EURO/USD ended the month of April on a positive trend with the currency pair turning bullish on Monday and Tuesday. The performance was influenced by appealing eurozone GDP performance which surpassed analyst expectations.
The week kicked off with numerous Eurozone and German events which contributed to the uptick in the EURO/USD. The German GfK consumer climate was reported at 10.4 points which is slightly higher than the projected 10.3 points. Analysts will maintain a close watch over the German CPI whose current estimate is 0.5%, as well as eurozone Flash GDP which they estimate will rise to 0.3%.
Strong data release in the U.S.
Meanwhile across the pond, the Chicago PMI in the U.S. which is expected to surge to 59.1. There is also the CB Consumer Confidence which analysts believe will rise to 126.2 points. The US Federal Reserve is expected to release a rate statement today (Wednesday) and US ADP nonfarm payroll announcements are also anticipated today.
There are still uncertainties about a potential U.S.-China deal but negotiations continued on Tuesday in Beijing. However, US Treasury Secretary Mnuchin revealed that the talks are approaching their conclusion although he did note that a deal is not guaranteed. Trade wars between China and the U.S. have affected the global economy and slowed down growth. If the talks between the two countries result in a trade deal, then it would encourage a higher risk appetite by investors and improve the Euro’s performance against the US dollar.
The EURO/USD has been on an overall bearish performance since November last year despite numerous bullish surges along the way. The latest bull surge in the currency pair kicked off towards the end of April in line with the numerous upcoming releases with regards to market performance.
The US Treasury revealed that it plans to maintain the current interest rates for the remaining part of 2019 courtesy of the latest inflation figures. The Core PCE Price Index which the US Federal Reserve uses to determine the level of inflation was reported at 0.1% in February and 0.0% in March. The two announcements were combined on Tuesday since they were not announced in the previous two months. Consumer spending had a 0.9% uptick in March this year which outdid the 0.7% estimate. The better than expected performance was due to higher spending on health care and motor vehicles.
Westpac analysts have recommended that traders should buy EUR/USD 1.1205 amid the better employment data, GDP and CPI reports. The analysts wrote that the markets have demonstrated weak EZ economic activity over the past 12 months and the surprising thing currently would be better regional data.
Westpac also noted that domestic and foreign political risks such as Brexit had a huge impact on the EURO/USD currency pair. The Euro dropped by a significant value due to the Brexit negotiations which did not yield a deal in the latest session in April. However, things to be easing down and thus the currency pair is expected to take a bullish course.