A good report on consumer sentiment in Germany did not help buyers of the European currency, and after another unsuccessful breakthrough of the resistance level of 1.1450, pressure on the euro resumed. Additional problems were created after the report on the growth of the French economy and lower inflation in Germany.
According to leading data, consumer sentiment in Germany this February may improve, which will support the country's economy in a period of slowing activity. As indicated in the GfK report, the leading consumer confidence index in Germany in February 2019 rose to the level of 10.8 points against 10.5 points in January. In this regard, the company expects private consumption in Germany to grow by 1.5%.
The index of economic expectations GfK in January fell to 10.7 points from 14.1 points in December, and the index of consumer expectations regarding revenues rose to 59.9 points from 53.8 points.
As indicated above, the weak report on the growth of French GDP has put pressure on risky assets. The decline in the 4th quarter was due to anti-government protests. According to the first estimate of the statistical bureau of France Insee, GDP in the 4th quarter grew by only 0.3% compared with the previous quarter, while economists expected a larger increase compared to the 3rd quarter of last year.
The weak consumer price report in Germany, which fell much stronger than economists had predicted in January of this year, underlines the recent weakness in economic data, which will force the European Central Bank to think about it several times before talking about interest rates and their future.
According to the Federal Bureau of Statistics Destatis, the harmonized index of consumer prices in January fell by 1.0% compared with the previous month and grew by 1.7% compared with the same period of the previous year. Economists had expected a 0.8% decline.
As for the CPI of Germany, calculated by national standards, it decreased by 0.8% compared with the previous month and showed an annual growth of 1.4%.
In the afternoon, all attention will be focused on the Federal Reserve decision on interest rates. Most likely, the Fed will be more cautious about monetary policy due to the fact that the risk of a slowdown in the US economy has seriously increased lately, and volatility in financial markets has only calmed down after the December tightening of monetary policy.
As for the technical picture of the currency pair EUR / USD, the bulls left the market after an unsuccessful break of the resistance level of 1.1450 in the first half of the day. The downward correction scenario continues to be played, and the support breakout of 1.1410 will lead to a larger sale around 1.1370 and 1.1330.
The material has been provided by InstaForex Company -
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