The EUR/USD is currently testing the significant support of 1.11.
Looking at the EUR/USD 4 hourly chart above, we see the totality of the bearish pressure this week.
As mentioned in the weekly forecast, bearish momentum will likely test the lower bollinger band in the weekly chart and it is appearing to be possible that it will attempt to breach 1.11 too.
Should a bullish recovery returns, the immediate resistance will be 1.1145 followed by the lower bollinger band.
Euro Economic Data Continues To Disappoint
The Spanish Unemployment Rate is reported to be 14% instead of 13.7%. This is worse than expected and there is apprehension that the economic situation may be crucial. Employment is a fundamental component of the economy as it leads to consumer spending and hence retail sales. A high unemployment rate may be an indicator of a troubled economy.
The German Ifo Business Climate was also reported to be worse than expected. It was reported to be 95.7 instead of 97.1. This is a low last visited a few years ago. Business Climate surveys are influential as the sentiment of businesses is a leading indicator of economic health. A healthy sentiment suggests that an economy is moving along well while a cautious sentiment may see less business activities due to prudence. As Germany is a significant component of the euro zone economy. it is possible that negative sentiment towards the euro currency has increased.
While the European Central Bank maintained a hold on the rates, official comments are reported to be giving a sense of possible upcoming cuts and quantitative easing. The anticipated increase in liquidity of the euro currency may weaken it’s value and dampen sentiment.
All Eyes Across The Atlantic
Towards the end of the week, we will see the US release their Advance GDP figure. It is expected to report a 1.8%. A number of analysts are doubtful considering the ongoing trade wars and challenges big corporations are facing such as Boeing and its 737 planes. A positive result will likely add positive sentiment to the market while a negative result may flood the market with more pessimism.