The Euro is trading higher at the mid-session. A better than expectedU.S. Housing Report erased earlier weakness caused by a worse thanexpected German Retail Sales Report.
The Euro is trading higher at the mid-session. A better than expected U.S. Housing Report erased earlier weakness caused by a worse than expected German Retail Sales Report. Gains may be limited to the upside as traders await this week’s decision from the European Central Bank.
Over the weekend the European Commission cut its forecast for the Euro Zone. The new report now shows a contraction twice as deep as it estimated close to 90 days ago.
In addition to a contraction of about 4%, the budget deficit for this region is expected to widen to 6.5% while unemployment may soar to 11.5%. News that German Retail Sales fell unexpectedly in March encouraged selling pressure early this morning.
All of these reports indicate that an interest rate cut by the European Central Bank to a historically low 1.0% is inevitable. The market moving news will be the announcement of the ECB’s quantitative easing plan. Traders are interested in seeing how big the plan is and what it encompasses. The Euro could be under pressure if this new plan is bigger than estimated.
Early this morning the EUR USD erased the downtrend and turned up on the hourly chart on the move through the main top 1.3346. The next upside objective is 1.3587 to 1.3854. There is an old top at 1.3582 so look for 1.3582 – 1.3587 to be important resistance.