A new set of negative reports has hit the euro area by the middle of the week. According to the available data, the regional industrial production dipped by 0.9%, while expectations were voiced at 0.4%. Notably, this downturn has been the major since the global financial crisis. However, the weakening hardly surprises anyone in the market, as the industrial rates were low in Q4 mostly due to a performance of Germany. Still, the key issue is a persisting risk of a further economic growth slowdown in early 2019.
The euro that is no longer an attempt to restore previous positions is facing pressure after further pessimistic reports. For now, the euro-to-US dollar rate is fluctuating above the $1.13 handle but it still can slide at any time. In particular, further movements will mostly depend on the greenback. The US dollar is not very good now but does the best to stay its grounds. Bulls probably decided to take a break for further hikes that may be guided by the general market atmosphere.
This week, the key event is the talks between Washington and Beijing. Stock market optimism restrains the moves of the US dollar being a protective asset. At the same time, the trade issue settlement will make the US dollar more attractive in terms of potential investments, which is more influential now.
After the 3-month bottom recorded yesterday, the euro still can be depressed by the European economic reports, Brexit and new fears of the global economy state. In the near term, the euro-to-US dollar rate will keep facing negative risks.