Thin trading and positive French data didn’t help the Euro today. The economic downturn in Europe is deep. It could fall more next week.
Today’s holiday of Good Friday in many places around the world meant very thin trading. In such days, prices can move sharply, and sometimes break major lines, only to retreat later on.
French Industrial Production was significantly better than expected: it dropped by only 0.5%, much better than early expectations of a fall of 1.1%. Good data from a major EZ member should have lifted EUR/USD.
With thin trading, a sharp move could have happened. But the EUR/USD didn’t budge. EUR/USD continues to be low, now trading at 1.3141,
The Euro doesn’t want to go up.
As I mentioned earlier this week, the Euro still suffers aftershocks. The Italian earthquake didn’t help the bad data that already weighs on the Euro: fears of deflation, high unemployment rate and doubts about the existence of the currency itself hurt the common currency.
Next week, after festivities are over, the Euro can return to it’s previous trading range, between 1.25 and 1.28. Yes, under 1.30.
Will Jean-Claude Trichet do some extreme moves to help the European economy? Will he join the “forex war“?
According to his behavior in the past, such as the European rate decision, this is unlikely to happen.