The effect of the poor US GDP is still intact and keeps EUR/USD above the critical 1.1050 level which has capped its range for quite some time. The pair maintains a safe distance from this level.
While the relatively upbeat FOMC statement limited the collapse of the greenback, we are not seeing a continuation even after unimpressive data from the euro-zone.
- German retail sales badly disappointed with a fall of 2.3% in March. This came contrary to expectations for a rise of 0.5%.
- French consumer spending also fell short of predictions with a drop of 0.6%, just under a slide of 0.5% that was on the cards.
- Spanish data actually came out better than expected, but this doesn’t seem to rock the boat that much. GDP rose by 0.9% in Q1, beating the 0.8% expected, and prices have dropped only 0.6% in April, better than 0.7% last time and predicted. Spain had one of the worst deflation levels.
The Fed sees the poor 0.2% growth rate (annualized) as transitory and basically blames the weather. We could even find it optimistic about consumer spending in Q2, hinting about data coming up later today.
1.11 was the low euro/dollar has reached late in January, and now the pair is hugging this level. Immediate resistance awaits at 1.130, which capped the most recent moves. It had already reached a high of 1.1186 after the big breakout. This is followed by 1.1250.
On the downside, we find the round 1.10 below 1.1050. 1.0930 and 1.0860 follow.
More: EUR/USD broke out of wide range – is it the real thing?
Here is how it looks on the chart:
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