Euro puts up with current economic conditions

Posted 15 May, 2018

The European currency has recently reached 10-day peaks against the US dollar, but then stuck near 1.20 handle, which is said to remain now the key guideline for the bulls making upward euro attempts. Later, EUR-USD rate dipped to 1.19 or even below.

With the current German and euro-area reports, it becomes clear that the economic growth has slowed down in the region, though such development has failed to be a surprise to anybody in the market, including euro. Along with released figures, there are no optimistic signs either. Specifically, the European Central Bank many times noted weakening of the European economy, while GDP growth seems to be at the peak in late 2017. 

Besides, ZEW economic sentiment is also mostly negative, though it is generally connected with geopolitical tensions in the world.

The released figures are unlikely to influence the position of ECB Chairman, which is still focused on the inflation. Still, despite the unfavorable economic environment in the region, ECB's representative has lately hinted that the interest rate revision should be expected within few quarters rather than years, as stated the market analyst.

However, the market takes this signals with a grain of salt so far, and insiders make only short-term euro purchases with further profit taking. However, the positions of the euro will face some influence in case of signs of regulator's firm stance towards policy normalization. For now, the euro changes hands near the 2018 bottom.

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16 May, 2018 14:18

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