The Euro came to terms with the new economic reality

  • And
  • +A

On the eve of Euro reached a 10-day highs against the dollar, stalled at the level of 1.20, which at this stage remains a key reference point for the bulls trying to push the single currency to its former heights. Subsequently the pair has slipped to the South, clinging to the support level of 1.19.
Today’s data from Germany and Eurozone confirmed the slowdown in the region’s economy, which surprised no one, including the Euro. In addition to the eloquent figures, which lately do not spoil the positive signals we have heard from ECB officials that the health of the European economy has deteriorated, and at the end of last year, GDP has probably reached peak growth. As for the indicators of sentiment from the Institute ZEW, here also prevails a negative, but mainly due to geopolitical tensions in the world.
Hardly the numbers released today can affect the mindset in the camp of the ECB governing Council, the main headache of which is inflation. It is noteworthy that despite the gloomy economic picture in the region, the representative of the ECB Villeroy, which has traditionally adhered to a “dovish” views, unexpectedly hinted that a rate hike should be expected in the next few quarters, not years.
While market participants decided not to take this signal seriously, limiting short-term Euro purchase and subsequent profit-taking. But if you later there are signs that the regulator is seriously adjusted on the normalization policy, it will affect the position of the single currency, which is trading near lows of 2018.
Michael Mashchenko,
Analyst social network for investors
eToro in Russia and the CIS