EURO Retreats Amid Positive Confidence Data

EURO Retreats Amid Positive Confidence Data

EUR/USD closed the first day of the week with little change and gained momentum during the European session on Tuesday. However, having touched the highest level in three weeks at 1.2170, the pair reversed its course and turned negative during the day.

The euro is showing slight losses, and now the EUR/USD pair is trading at 1.2116, down 0.15% over the day. The price dynamics of the EURUSD pair remain somewhat unchanged as the US markets are closed today due to President’s day. Investors are optimistic about the upcoming US stimulus package. News on this matter is expected by the end of the month.

In the North American session, the dollar has risen sharply and has recently returned some of this profit. However, the dollar stays higher against all major currencies throughout the day, except for the pound sterling. JPY and CAD are the weakest of the major currencies.

Regardless, stocks remained calmer and US futures indicated moderate gains despite a slight delay in previously released data on US-China tensions.
German Economic Confidence Beats Forecast
German ZEW data for February showed that the index of economic sentiment improved to 71.2 against expectations of 59.5 and 61.8 last year. While the index for the current conditions sub-index reached -67.2 in February against -67.0 expected and -66.4 previously recorded.

Meanwhile, the index of economic sentiment ZEW in the euro area in February jumped to 69.6 against the forecast of 57.0 and the previous value of 58.3. ZEW President Professor Achim Wambach said:

“Financial market experts are optimistic about the future; they are confident that the German economy will be back on the growth track within the next six months.”
“Consumption and retail trade, in particular, is expected to recover significantly, accompanied by higher inflation expectations,” Wambach added.

As noted by ZEW, inflation is rising in both Germany and the eurozone. At the same time, there are plenty of signs of trouble. Eurozone GDP for the fourth quarter of 2020 was -0.6%, compared with an initial estimate of -0.7%.

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Author : Azeez Mustapha

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Azeez Mustapha is an experienced author, trader, markets analyst, signals strategist, and funds-manager.