The single currency was trading 0.5% higher during the US
session and the euro erased more than half of Monday’s losses as the EURUSD
pair was hovering 20 pips below the 1.13 handle.
Earlier in the day, the German ZEW survey for November came
out and the economic sentiment improved somewhat, when it printed -24.1 against
expectations of -25.0 and the previous number remained at -24.7. However, the
current situation crashed sharply from 70.1 to 58.2, probably due to the
ongoing political crisis in Italy and a possible trade war between the EU and
USA. The economic sentiment indicator for the whole euro zone fell to -22.0
from -19.4 in October. The euro continued to crawl higher, despite these
miserable numbers.
The US calendar is empty today, again, and therefore there
are no other news on the agenda today.
Investors will then pay attention to tomorrow’s EU GDP
numbers for the third quarter and the year-on-year change is expected to stay
unchanged at 1.7%, while the quarterly basis is forecast to remain at 0.2%. The
economic momentum in the EU continues to decelerate, which might be negative
for the euro.
Shortly after, the US CPI numbers will be released, with the
headline CPI number seen climbing to 2.5% from 2.3% in October, whilst the core
gauge is expected unchanged at 2.2%. Rising inflation might be positive for the
US dollar.
The main resistance for the EURUSD pair is now at 1.13 and
while below, rallies could be sold and the outlook seems bearish. Breaking
above would cancel the immediate downward trend, with a potential relief rally
to 1.14. On the downside, the next target for bears might be at Monday’s lows
near 1.1220.
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