EUR/USD Falls To Five-week Low

Republished By Plato

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The euro has edged lower on Friday. In the European session, EUR/USD is trading at 1.0782, down 0.05%.

It has been a bumpy road for the euro in 2024, as the currency has declined 2.3% so far this year. Earlier today, EUR/USD dropped as low as 1.0768, its lowest level since February 21.

Weak German data weighs on euro

Germany, the largest economy in the eurozone, continues to struggle and that is weighing on the eurozone as well as the euro. German consumer confidence is mired in negative territory and this week’s retail sales report was dismal, with a 1.9% decline m/m in February. This was shy of the market estimate of 0.3% and marked a fourth straight decline. On an annualized basis, retail sales slumped by 2.7%, a fourth straight decline.

German and eurozone data has been weak, which is not surprising as elevated interest rates have dampened growth. The European Central Bank held the key interest rate at 4.0% for a fourth straight time this month and must decide on the appropriate timing for a rate cut.

The April or June meetings appear the most likely times for a rate cut. ECB member Francois Villeroy was the latest ECB policy maker to weigh in, saying on Thursday it was important to make a “moderate cut”, even if the ECB decided to then resume holding rates. ECB member Fabio Panetta said the same day that the central bank was leaning towards lowering rates as inflation continued to decline.

In the US, the week wraps up with the PCE Core Index, considered the Federal Reserve’s preferred inflation indicator. The index is expected to tick lower to 0.3% m/m in February, compared to 0.4% in January. Fed Chair Jerome Powell will speak at a conference in San Francisco and the markets will be hoping for some insights about rate policy.

EUR/USD Technical

EUR/USD tested support at 1.0765 earlier. Below, there is support at 1.0743
1.0798 and 1.0820 are the next resistance lines

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A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.