EUR/USD is now trading at 1.0880, up from 1.0846 it closed on Friday and above even lower levels seen in Asian trading.
The upwards move comes despite 3 worrying pieces of news from the old continent. A recovery is probably necessary after the Draghi + NFP crash, but could it be only temporary?
The not-too-good news:
- Greece: After around two weeks of quiet, the debt stricken country is back to the headlines. The Eurogroup meets to discuss Greek reforms and a third bailout is also in the background. Headlines from Athens and Berlin don’t sound too optimistic. Greek finance minister Yanis Varoufakis said that a referendum or new elections might be needed. Germany doesn’t expect firms decisions today.
- German trade balance: After a winning streak, Germany’s surplus surprisingly squeezed to 19.7 billion. If there was one thing keeping the euro bid, it was Germany’s export machine. If it isn’t running on all cylinders, we can certainly worry.
- French downwards revision: The Bank of France cut the Q1 GDP forecast to 0.3% from 0.4%. So, the weaker euro is not helping enough? France did some catching up with Germany in terms of growth recently, but this lower forecast casts worries about the zone’s second largest economy.
While we do see room for a correction in the current, seemingly oversold conditions, these pieces of data cast a shadow on the recovery. We could see yet another dead cat bounce.
Opinions:
- Rally in EUR? Here is why it is difficult – Morgan Stanley
- EUR/USD: 1.05 Next Target En-Route To Parity; Downtrend Firmly In Place – ANZ
- EUR/USD weekly forecast
What do you think?
Here is the chart, showing the small recovery so far:
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