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Euro Eases Gently After Poor Eurozone GDP Data

EUR PRICE, NEWS AND ANALYSIS:

  • Eurozone GDP growth in the fourth quarter of 2018 was unchanged from Q3’s 0.1% increase quarter, staying at its lowest rate.
  • Italian GDP data showed the country is now in recession.
  • The Euro eased slightly on the figures but continues to be driven principally by events in the US and by the Brexit negotiations between the UK and the EU.

EURO SLIPS ON EUROZONE GDP DATA

Economic growth in the Eurozone was just 0.1% quarter/quarter in the fourth on quarter of last year according to data. That was the same growth rate as in the third quarter and was in line with expectations.

Meanwhile in Italy GDP contracted by 0.21% quarter/quarter in Q4 after a 0.1% fall in Q3, putting Italy into recession.

read more on EUR/USD slips

Looking ahead though, the Euro will likely be driven principally by events in the US. As the chart above shows, EURUSD jumped late Wednesday after more dovish than expected comments from the Federal Open Market Committee. The Fed kept US interest rates unchanged, as expected, but also signaled a potential end to rate hikes.

As for EURGBP, that will likely be driven largely by the Brexit negotiations between the EU and the UK.

Euro Eases Gently After Poor Eurozone GDP Data

New one pound coins, which come into circulation today, are seen in London, Britain March 28, 2017 REUTERS/Neil Hall

GBPUSD Analysis: Bullish ’Golden Cross’ Taking Shape

STERLING AND GBPUSD:

  • Moving average crossover may fuel renewed GBPUSD bullish sentiment.
  • Prior ‘Death Cross’ foretold GBPUSD sell-off.

A closely followed technical indicator is forming on the daily GBPUSD chart and may renew bullish sentiment in the pair.

A ‘Golden Cross’ on a chart is a bullish indicator and occurs when short-term moving average breaks above its longer-term average, highlighting positive market sentiment. On the chart below, the 20-dma has just broken the 200-dma and if the 50-dma also breaks above the longer-term average – around 2 cents away – bullish sentiment will be refuelled. While not a guarantee of higher prices, if the crossover does occur, and is confirmed with higher trading volume, it should prompt further positive sentiment. The initial target lies at 1.300 ahead of1.3406 – 50% Fibonacci retracement – before the 61.8% retracement level at 1.3635 comes into focus.

The chart also shows the price action after a ‘Death Cross’ – the opposite of a Golden Cross – occurred in mid-2018 with GBPUSD falling from around 1.3600 to 1.2435 over a six-month period.

Elsewhere on the chart, GBPUSD trades comfortably above the 200-dma, providing initial support around 1.2970, with secondary support seen at 1.2894, the 23.6% Fibonacci retracement level.

The U.S. dollar index, a gauge of its value versus six major peers, was down 0.13% to 94.91 by 03:37 AM ET (08:37 GMT), close to a three-week low after falling 0.5% on Wednesday.

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