EUR/USD Current price: 1.1437
- Risk aversion returned in London following soft German growth data, poor earnings reports.
- US data was also a miss, fueling equities´ decline ahead of Wall Street's opening.
The EUR/USD pair fell to a fresh weekly low of 1.1411 after trading as high as 1.1489 at the beginning of the day. The early advance was a result of improved market mood on the back of China signaling more stimulus coming to fight the economic slowdown. However, sentiment deteriorated with news coming from Germany as official data showed that during 2018, the economy grew at its slowest pace in 5 years, with the annual GDP up by 1.5%. Equities lost their upward momentum, later turning red following a dismal JP Morgan earnings report. The EU released the November trade balance, which posted a surplus of €19.0B, better than the €13.7B expected, but the positive number passed unnoticed.
Market players are waiting for some Brexit definitions with the Parliamentary "meaningful vote" on Brexit's deal, which will clearly affect the Pound, but given its relevance, the effect could extend through all the FX board. The dollar retains its positive stance despite US data just released, missed the market's expectations. The December PPI fell by 0.2% MoM, although the annual reading matched the market's forecast of 2.5%. The core readings resulted at -0.1% and 2.7%, both below the previous figures and expectations. The NY Empire State Manufacturing Index for January was extremely soft, printing 3.90, its lowest level over a year, vs. the previous 10.90.
Poor US data seems to be fueling the prevalent risk-off mood, with Wall Street poised to open sharply lower, keeping the dollar on demand. The pair is technically bearish, given that, despite bouncing from the mentioned low, it remains incapable to recover above its 100 SMA in the 4 hours chart, and with the 20 SMA turning sharply lower well above the current level. Technical indicators in the mentioned chart remain near daily lows, just partially losing the downward momentum, also suggesting that the risk is skewed to the downside. A break below 1.1400 will be quite a discouraging sign for bulls, which may rush out and therefore fuel the decline.
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