The euro-dollar exchange rate is going to approach a decisive week after the breach of the trend line and the positive US data. It begins to emerge the thought on US economic growth, while Europe seems to grow with the handbrake on.
The euro-dollar exchange rate, after the week that just ended, it seems to have put an end to any hope of return above 1.14 level.
Wednesday was the only one when EUR/USD close higher and Friday session led it to cut down the trend line that until then had supported the trend.
The echo of the related rise in the Fed’s monetary policies and fears of interest rates seems to have worn off, with the US dollar gaining ground against the euro and other stronger currencies, including the yen.
The disappointing data on the US labor market were soon replaced by more than encouraging data on retail sales in April.
The initial claims for US unemployment benefits in the second week of May totaled 294.000, up after 274.000 of last week. Jobless claims continued to grow, increasing from 2.124K to 2.161K.
Retail sales in April have recorded a + 1.3%, correcting upward the expectations of + 0.8% of the market and rising after -0.3% of the previous month. US Retail sales (core version) stood at + 0.8%, up from + 0.4% in March.
American forecasts, which see the country growing, then begin to take shape after a first quarter not encouraging, reviving an appreciation of the US dollar.
At the same time the events that are involving and questioning the Eurozone certainly do not help the Community currency.
The Eurozone Gross Domestic Product for the first quarter was notified at 0.5%, down from 0.6% of the previous survey. The industrial production for the month of March decreased by -0.8%, below analysts’ forecasts, subject to + 0.1%, and on par compared to the month of February.
Added to these data and to appease the optimism, there is the approach of the referendum for the Brexit and recent news about a new phase of austerity that concerns Greece. With a two-month period from May to June we will have much more to say about the near future.
For the next week there are major market movers that could affect the performance of euro-dollar.
With the last meetings of the central banks that are now distant in time, it will be the data on the economies of the two economic areas to perform the leading role.
The change of the trend of EUR / USD will be conditioned by one or more high-impact data, such as:
- Tuesday, May 17 – US building permits and the main index of US consumer price;
- Wednesday, May 18 – Eurozone consumer price index and US crude oil inventories;
- Thursday, May 19 – Production index of the Philadelphia Fed;
- Friday, May 20 – existing home sales, expected to rise.
We’ll see how the market will move according to these publications and what will be the market drivers that will determine the trend of the currencies in the next week.