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Euro Gets Whipsawed Focus Turns to Zew Survey and Retail Sales

David Becker
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Euro Gets Whipsawed Focus Turns to Zew Survey and Retail Sales

EUR/USD dropped to 1.3804 post the ECB meeting on Thursday in early US trading, which is an eight-day low. Thursday outside reversal day, where the Euro made a higher high and then a lower low could mark the end of the upswing for the currency pair. The dovish remarks by Draghi Thursday, along with an encouraging jobless claims figure out of U.S., has set up a dovish tone, which could become a trend.

In economic news, Germany posted a trade surplus of EUR 14.9 billion in March, down from EUR 15.8 billion in the previous month. Exports declined 1.8% m/m, while imports dropped 0.9% m/m. The unadjusted surplus amounted to EUR 16.4 billion, versus EUR 18.9 billion in March last year, with the decline mainly due to strong import growth, which amounted to 5.6% y/y.

Germany posted a current surplus of EUR 19.5 billion in March, bringing the total in Q1 to EUR 47.4 billion, versus EUR 47.4 billion in Q1 last year. Next week the focus will turn to the Zew survey, which will give investors a view of sentiment. Additionally, the US will report April retail sales. Expectation are for a 0.5% increase month over month compared to a 0.7% last.

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After generating an engulfing pattern, which is candlestick reversal pattern, the EURUSD sliced through support near the 10 and 20-day moving averages. Momentum has changed as the MACD (moving average convergence divergence index) has generated a sell signal. 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 RSI (relative strength index) moved lower with price action reflecting accelerating negative momentum, while printing near 46, which is in the middle of the neutral range.

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