Euro (EUR) Talking Points:
- EURUSD[1] back below 1.1300 and this time it may be there for some time.
- German finance ministry slashes 2019 GDP to just 0.5% from 1.0%.
The DailyFX Q2 EUR Forecast[2] is available to download including our short- and medium-term look at the Euro.
Fundamental Forecast for EUR: Bearish
The single-currency is seemingly friendless against a raft of other currencies and looks set to move lower, shifting my forecast to bearish from neutral despite the current lowly levels. Not only are fundamentals looking negative, the EURUSD chart looks weak in the short- to medium-term with little in the way of support seen.
This week’s Euro-Zone data prints have been fairly neutral, but all remain at lowly levels with no encouraging signs seen in the releases. German manufacturing continues to sit at multi-year lows with the EZ’s economic export engine still suffering from the diesel emissions scandal, a growth slowdown in China, heightened US-EU trade fears and Brexit. This week the German finance ministry confirmed market rumors that the country’s 2019 growth would be a mere 0.5%, down from earlier tepid, expectations of 1% and sharply lower than the 2.1% predicted one year ago. Economic sentiment remains weak, and Germany now needs to work out how to boost growth via government investment and increased public consumption to make up for export-related losses. It is highly unlikely that the ECB will, or can, loosen monetary policy further as even lower – more negative – interest rates will rile German savers and put the Euro-Zone banking sector under further strain.
There could be worse to come. If US President Trump continues to
