The Euro Holds Steady Along with Labor Data
The Eurozone’s unemployment was unchanged at 12.1% in November. The lowest numbers were in Germany and Luxembourg, and the highest in Greece and Spain. Italian unemployment rose to a fresh record of 12.7% in November from 12.5% in October and was higher than consensus estimates.
German trade surplus grows as exports rise and imports fall. Germany’s trade surplus rose to a 17.8 billion Euros in November from 16.7 billion in October but missed consensus. Exports grew for the fourth month in a row, increasing 0.3% month over month, while imports fell to 1.1%. The surprise is likely to reduce expectations for Q4 GDP.
Germany reported a 2.1% rise in November factory orders, completely offsetting the October decline. Neither the strong IP data nor the 1.4% gain in euro area November retail sales managed to stem the erosion of the euro on Wednesday. The yield differential continues to favor the greenback which will likely push the EURUSD through support.
The Euro is now testing long term support which is seen near an upward sloping trend line that comes in near 1.3540. A break of this level is likely to test interim support near 1.3350. Resistance is seen near the 10-day moving average at 1.3685. Momentum is negative with the MACD generating a sell signal on Friday last week. This occurs when the spread (the 12-day moving average minus the 26-day moving average) crosses below the 9-day moving average of the spread. The index moved from positive to negative territory confirming the sell signal. The RSI continues to accelerate along with price action printing near 43 which is on the lower end of the neutral range.
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