Euro stabilized despite low German business confidence.
On Monday, the EURUSD began the week in positive territory. The Euro is trading at 1.0914, up 0.18% in the European session.
The euro had a wild week, posting big gains during the week before reversing course and falling 0.88% on Friday. Nonetheless, the euro had a positive week, increasing 1.2% against the US dollar.
German business confidence has fallen.
Ifo Business Climate in Germany fell to 86.4 in December, worse than forecast. This was a decrease from a revised 87.2 in November and fell short of the market estimate of 87.8. Business conditions and expectations again weakened in December, falling short of predictions as companies remained pessimistic. concerning the German economy. The lack of confidence reflects the German economy’s sustained decline.
PMIs for December showed deterioration in both the services and manufacturing sectors. Germany, the eurozone’s largest economy, also reported a drop, with the PMI falling to 48.4, down from 49.6 in November and falling short of the consensus projection of 49.8. The services industry has been contracting for five months in a row, while manufacturing has been contracting since June 2022.
The ECB maintains its hawkish stance.
On Thursday, the European Central Bank kept the benchmark rate at 4.0% for the second time in a row. This was predicted, but the central bank resisted market expectations for interest rate reduction next year, sending the euro up more than 1% against the US dollar. upon the announcement.
In terms of rate policy, there is a significant gap between the markets and the ECB. The ECB remains hawkish, with Reuters reporting on Friday that ECB governors are unlikely to lower interest rates before June. Markets are marching to a different beat, pricing in at least six rate cuts in 2024, with the first cut projected around March. Lagarde has stressed that the central bank’s choices will be based on evidence rather than time, but she may have to join the rate-cutting bandwagon if inflation continues to decrease at a rapid pace.
EURUSD Technical Analysis
The EURUSD is placing pressure on the resistance level of 1.0929. Resistance is located above at 1.0970.
1.0855 and 1.0814 provide assistance.
