EUR/USD: German economic growth at a 12-month high level in 1Q 2017


EURUSD Movement

For the 24 hours to 23:00 GMT, the EUR rose 0.61% against the USD and closed at 1.0928 on Friday, after Germany’s seasonally adjusted preliminary gross domestic product (GDP) rose 0.6% on a quarterly basis in the first quarter of 2017, meeting market expectations and charting its strongest quarterly growth in a year, thus suggesting that the common currency region’s largest economy started the year on a stronger footing. In the prior quarter, GDP had climbed 0.4%. Moreover, the nation’s final consumer price index advanced 2.0% on an annual basis in April, confirming the preliminary print and compared to an advance of 1.6% in the previous month.

Separately, the Euro-zone’s seasonally adjusted industrial production unexpectedly fell 0.1% on a monthly basis in March, defying market expectations for a rise of 0.3% and compared to a revised fall of 0.1% in the previous month.

The greenback traded lower against its major peers on Friday, as disappointing US inflation and retail sales data raised concerns about the health of the nation’s retail sector and the broader economy.

Data showed that advance retail sales in the US recorded a rise of 0.4% on a monthly basis in April, undershooting market expectations for a rise of 0.6%. Advance retail sales had risen by a revised 0.1% in the previous month. Moreover, the nation’s consumer price index (CPI) rose less-than-anticipated by 2.2% on an annual basis in April, compared to market expectations for an advance of 2.3%. In the prior month, the CPI had risen 2.4%. Meanwhile, on a monthly basis, the CPI climbed 0.2% in April, meeting market expectations and following a drop of 0.3% in the prior month.

On the other hand, the nation’s flash Reuters/Michigan consumer sentiment index surprisingly jumped to a level of 97.7 in May, highlighting that Americans are getting increasingly optimistic over the nation’s economic outlook. The index had registered a reading of 97.0 in the prior month, while markets expected for a steady reading. Meanwhile, the nation’s business inventories registered a rise of 0.2% in March, at par with market expectations and after recording a revised similar rise in the prior month.

Separately, the Philadelphia Fed President, Patrick Harker, called for an additional two interest rate hikes this year.

In the Asian session, at GMT0300, the pair is trading at 1.0927, with the EUR trading marginally lower against the USD from Friday’s close.

The pair is expected to find support at 1.0876, and a fall through could take it to the next support level of 1.0825. The pair is expected to find its first resistance at 1.0956, and a rise through could take it to the next resistance level of 1.0985.

Moving ahead, investors will await the release of German Buba monthly report, slated to release in a few hours. Moreover, the US NAHB housing market index for May, set to release later in the day, will be on investors’ radar.

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

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