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Despite deteriorating economic data from Eurozone and specially two of its leading economies Germany & France, EURUSD price remain between 1.3410 - 1.3330 in last few days, although we have seen some volatile price movements both bullish and bearish, but price somewhat failed to breakout of this range and make a new low.
The Eurozone Q2 GDP missed its mark, France managed to show no growth and German flash GDP reading came in at -0.2% versus -0.1% eyed as foreign trade and investment, especially construction were responsible for the contraction. Foreign trade is likely to become a much bigger problem for Germany in Q3 of this year as heightened tensions with Russia and a series of diplomatic sanctions are almost certain to cool off activity as the year proceeds.
Moreover, the yield on the 10 year German Bund dropped below the 1% mark for the first time ever, but the currency markets however were unperturbed by the news as EUR/USD held its ground at the 1.3350 level and then staged a quick short covering rally to 1.3390. There was absolutely no fundamental reason for the move, but with the pair so grossly oversold it was due for a bounce as the shorts have been unable to break the 1.3330 support for the past 5 days. Still the EURUSD remains in a sell the rally mode and today’s weak GDP data only underscores the economic challenges facing the region in the second half of this year.
The Eurozone Q2 GDP missed its mark, France managed to show no growth and German flash GDP reading came in at -0.2% versus -0.1% eyed as foreign trade and investment, especially construction were responsible for the contraction. Foreign trade is likely to become a much bigger problem for Germany in Q3 of this year as heightened tensions with Russia and a series of diplomatic sanctions are almost certain to cool off activity as the year proceeds.
Moreover, the yield on the 10 year German Bund dropped below the 1% mark for the first time ever, but the currency markets however were unperturbed by the news as EUR/USD held its ground at the 1.3350 level and then staged a quick short covering rally to 1.3390. There was absolutely no fundamental reason for the move, but with the pair so grossly oversold it was due for a bounce as the shorts have been unable to break the 1.3330 support for the past 5 days. Still the EURUSD remains in a sell the rally mode and today’s weak GDP data only underscores the economic challenges facing the region in the second half of this year.
