Euro under pressure due to the fall in business activity in Europe
Italian elections reminded the markets about the ongoing political uncertainty in the region. The voting results indicate the necessity of forming a government, but none of the coalition groups do not have sufficient support to avoid a “hung Parliament”. This means that ahead of the fourth-largest European economy, political uncertainty, which can take a long time.
Euro still tries to disengage from the subject, mainly due to the resolution of the situation with the coalition in Germany. The unstable position of the dollar also contribute. However, locally the currency was still under pressure, and the fault of another negative economic signal. In particular, indicators of business activity in the region in the service sector and the composite index were worse than expected, investor confidence index Sentix fell sharply from 31.9 to 24 points, and retail sales on a monthly basis, fell again, although not as large as in December.
Ahead of the currency new challenges, chief among which will be the ECB meeting this Thursday. Given the recent Eurozone economic indicators that give signals of slowdown in economic activity, the regulator is unlikely to adopt a more “aggressive” tone, primarily because of the still low inflation.
Thus, in the coming days, trading on EURUSD, apparently, will be accompanied by downward risks, which will increase in case of return demand for the dollar. By the way, from the beginning of the week the pressure on the us dollar, which came from the protectionist rhetoric trump, has somewhat weakened. From a technical point of view, if in the near future the EUR / USD pair will be fixed under the 1.23 level, the potential loss of local support in the 1.2250 area will increase.
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