Eurusd drops amid mixed economic signals from the US and eurozone

EURUSD Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	-0.35%	-39.6 Pips
Week to-date	-0.62%	-70 Pips
May	-0.28%	-31.3 Pips

Upcoming key events (London Time)

Fri 10:00 AM EUR Harmonised Index of Consumer Prices (HICP) (12-mth)
Fri 01:30 PM USD Nonfarm Payroll Employment

What happened lately

In the United States, economic indicators showed mixed results. Initial Unemployment Insurance Claims rose to 241K from 223K, indicating a slight deterioration in the labor market. The PCE Price Index excluding food and energy fell from February to March, reflecting a decrease in core inflation. Personal Income growth fell in March, but Consumer Spending increased, showing sustained consumer activity. Pending Home Sales increased significantly, reflecting a robust real estate market. The GDP annual rate declined to -0.3% in Q1 from 2.4% in Q4, suggesting a contraction in economic growth. The Chicago Purchasing Managers’ Index declined, showing slowed manufacturing activity.

In Germany, inflationary pressures showed slight moderation with the CPI inflation rate decreasing marginally in April. The Harmonised Index of Consumer Prices rose slightly month over month, while the yearly measure fell. The economy showed no GDP growth year-over-year, while quarterly GDP saw slight positive growth. Employment conditions were stable, as indicated by unchanged unemployment rates and a decrease in unemployment changes. Retail Trade saw declines, suggesting weakening consumer demand.

For the Euro Area, GDP remained stable year-over-year at 1.2%, with slight positive growth in seasonally adjusted quarterly measures. This suggests moderate economic resilience despite challenges. Economic indicators indicate the region’s gradual stabilization, with slight improvements in growth figures compared to the previous quarter.

The EURUSD experienced a decline of -0.35% to 1.12857 following the release of the U.S. and Eurozone data. Mixed results from the U.S., particularly the drop in GDP and rising unemployment claims, can weaken the USD, but the actual effect seems less pronounced as there were significant increases in consumer spending and pending home sales. On the Eurozone side, the stable GDP and slight improvements could suggest resilience, potentially supporting the euro. However, seeing both regions with mixed economic signals adds uncertainty to the EURUSD outlook. Upcoming economic events, such as the release of the Euro Harmonised Index of Consumer Prices and the U.S. Nonfarm Payrolls, could provide further direction for the currency pair, with high-impact results potentially causing significant fluctuations.

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What can we expect from EURUSD today?

EURUSD on Thursday dropped -0.35% to 1.12857. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for EURUSD looks bearish as the pair posted lower in Thursday trading session.

Looking ahead for the day, immediate support level is at S1 1.12538 with break below could see further selling pressure towards S2 at 1.12218. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 1.13411 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 1.12655 would indicate selling pressure.

For the week to-date, take note that EURUSD is bearish as the pair posted lower by -0.62%.

Key levels to watch out:

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