Not only Germany, but also the Euro Area is in the technical recession. Data revealed during the previous week show that GDP growth rate for Q1 this year is -0.1%, which is second consecutive quarterly drop in GDP rate. At the same time, y/y growth rate was 1%, less than forecasted 1.2%. The US ISM Services PMI dropped to the level of 50.3 in May from 51.9 posted previously. This was also below market expectation of 52.2. On a positive side is that the indicator is still holding modestly above 50. The week ahead would be important one for USD since the new inflation figures will be published, a day before FOMC meeting on June 13th – 14th. A new rate decision is on a table, with market currently pricing no-change in the level of interest rates. During the week ahead, ECB will also decide on interest rates, with current market expectation on a 25 bps rate hike.
EURUSD was traded in a mixed manner during the previous week. The pair started the week around level of 1.077, and reverted a bit to the level of 1.066, in order to finish the week reaching 1.077 again. In a technical analysis, the currency pair formed a so-called “smile” on charts, usually indicating potential for a short reversal to the upside. This reversal will be positive for the Euro and indicate a weakening for the USD. The RSI reached level of 50 however, it is still not indicating that the market is eyeing the overbought side. So, the struggle for the upside obviously will continue. Moving average of 50 days is modestly converging toward its MA200 counterpart, but there is still no indication that the indicator is ready to change its course.
The week ahead will be an important one for USD, considering important data on inflation as well as FOMC rate decision. Some increased volatility might be in store. Charts are pointing to some probability for the currency pair to reach 1.08 resistance line, and the same probability that 1.06 might be tested for one more time.
Important news to watch during the week ahead are:
Euro: Inflation rate for May for Germany, ZEW Economic Sentiment, ECB interest rate decision, Inflation rate for May
USD: Inflation rate for May, PPI for May, FOMC meeting and interest rate decision, Retail Sales for May, Michigan consumer Sentiment for June
EURUSD was traded in a mixed manner during the previous week. The pair started the week around level of 1.077, and reverted a bit to the level of 1.066, in order to finish the week reaching 1.077 again. In a technical analysis, the currency pair formed a so-called “smile” on charts, usually indicating potential for a short reversal to the upside. This reversal will be positive for the Euro and indicate a weakening for the USD. The RSI reached level of 50 however, it is still not indicating that the market is eyeing the overbought side. So, the struggle for the upside obviously will continue. Moving average of 50 days is modestly converging toward its MA200 counterpart, but there is still no indication that the indicator is ready to change its course.
The week ahead will be an important one for USD, considering important data on inflation as well as FOMC rate decision. Some increased volatility might be in store. Charts are pointing to some probability for the currency pair to reach 1.08 resistance line, and the same probability that 1.06 might be tested for one more time.
Important news to watch during the week ahead are:
Euro: Inflation rate for May for Germany, ZEW Economic Sentiment, ECB interest rate decision, Inflation rate for May
USD: Inflation rate for May, PPI for May, FOMC meeting and interest rate decision, Retail Sales for May, Michigan consumer Sentiment for June
