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EUR/USD: Euro little changed following upbeat GDP
The euro failed to build momentum Friday, as the EURUSD remained firmly capped below 1.25 despite upbeat Eurozone GDP figures.
The EURUSD traded within a range of 1.2400-1.2492. It would subsequently consolidate at 1.2465, declining 0.08 percent. The pair was unable to test the 1.2505 level, which represents the first technical resistance. On the downside, initial support is likely found at 1.2438.
The short-term outlook on the pair was unchanged from Thursday, when we stated:
“The EURUSD is trading without direction after falling to a 26-month low of 1.2357 last Friday. The pair is caught between 1.24 and 1.25, finding buyers and sellers at each end of that range.”
The common currency climbed for a third consecutive day against the British pound, which faced a brisk sell-off earlier in the week at the hands of a pessimistic Bank of England Inflation Report. The EURGBP climbed another 0.37 percent to 0.7971. The pair’s next resistance test is 0.7992. Initial support is likely offered at 0.7897, the 50-day exponential moving average.
The EURGBP is pacing for a weekly gain of 1.7 percent. The pair is trading at its highest level since mid-October.
Elsewhere, the euro weakened against the Canadian dollar, as the EURCAD declined 0.61 percent to 1.4106. The pair is testing the 1.4106 support. Below that level, 1.4017 is the next target. On the upside, resistance is ascending from 1.4245.
In economic data, the Eurozone economy rose faster than forecast in the third quarter, although this did very little to convince investors the 19-nation currency bloc was turning a corner.
Eurozone gross domestic product increased 0.2 percent in the July to September period as Germany rebounded and Greece finally pulled out of recession, the European Commission’s statistics branch reported today. Economists forecast a narrower increase of 0.1 percent.
Compared to year-ago levels, the Eurozone economy grew 0.8 percent.
Germany, which accounts for a third of Eurozone GDP, grew 0.1 percent in the third quarter, narrowly escaping recession. Year-on-year, Germany advanced 1.2 percent, beating expectations of 1 percent.
Germany contracted unexpectedly in the second quarter, raising concerns the Eurozone economy was backtracking.
Meanwhile, Greece finally emerged from a devastating six-year recession, as the Hellenic Republic expanded 0.7 percent in the July to September period.
France, the Eurozone’s second largest economy, expanded 0.3 percent on the quarter, exceeding forecasts of 0.2 percent. Year-on-year, the French economy advanced 0.4 percent.
The Eurozone economy is forecast to grow just 0.8 percent this year, as weak demand and an escalating East-West sanctions war continues to weigh on the nascent recovery. The European Central Bank is reportedly considering additional stimulus measures to help rev up the stumbling economy, which faces the real threat of deflation. This could entail buying sovereign government bonds as early as next year.
Eurozone consumer prices advanced just 0.4 percent in the 12 months through October, the European Commission confirmed today. Price growth was flat compared to September. Core prices, which strip away volatile goods such as food and energy, rose 0.7 percent annually.
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