• Euro bulls hoping on 1.1300 handle
  • ECB and FOMC minutes are in the spotlight
  • EZ growth trend in Q4 is one of the vital questions into the year-end

Last week, euro again down by 0.70% as disappointing PMI surveys dented the sentiment further. We learned from recent Germany data; Sentiment weakened further with the Germany economy contracted by 0.2% in 3Q of 2018 and Ifo business climate Index falls this month.

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said: “The cooling of Eurozone business growth to a four year low adds to signs that the economy faces a disappointing end of the year.”

He also said, “the disappointing business activity readings will add to concerns that risks to the growth outlook have become increasingly skewed to the downside.”

“Growth to remain below the trend rate in Q4 – Recent surveys indicate that eurozone GDP growth will have remained below the trend rate in Q4.” ABN AMRO Sr. Economist Aline said in a note.

According to Destatis, in the third quarter of 2018, the gross domestic product (GDP) shrank by 0.2% on the second quarter of 2018. This was the first decline recorded in a quarter-on-quarter comparison since the first quarter of 2015. In the first half of 2018, the GDP had increased, by 0.5% in the second quarter and 0.4% in the first quarter.

Besides the dollar index (KTM: USDX) advanced to 97.00 handles. The 10-year TY rose

Review:

  • Germany economy contracted by 0.2% in 3Q of 2018
  • Flash Germany Services PMI Activity Index at 53.3 (54.7 in Oct); 6-month low.
  • Germany Manufacturing PMI registered a 32 month low of 51.6 in November, down from October’s 52.2
  • Flash Eurozone Manufacturing PMI at 51.5 (52.0 in October). 30-month low
  • Flash Eurozone Services PMI Activity Index at 53.1 (53.7 in October). 25-month low.

Preview: ECB and FOMC minutes will be interesting to focus on

The week ahead will be busy on the macroeconomic data front; besides G20 summit in the spotlight. ECB and Fed minutes grab the attention too.

Furthermore, later this week’s EA and US inflation data partly cast the EURUSD short-term trend.

Market participants are a focus on the comments on the Fed future rate cycle. Besides ECB President Draghi and ECB Executive Board members testimonies grab the euro traders attention.

FX:

EURUSD failed to gain a footing above the 1.1500 last week triggering a retracement to 1.1325. Whereas the daily indicators still giving a bullish outlook, especially the oscillator still holds the bullish crossover.

Support at the parallel level 1.1300 has held so far; however, the rallies have been capped between 1.1470-1.1500. On the downside, a break below 1.1300 may trigger losses towards 1.1265 and 1.1220/1.1200.

Ahead of the minutes, the weekly outlook remains in ranges; a small descending channel has formed in the hourly chart. Hence, we expect the price likely to consolidate between 1.1260-1.1470 in the week ahead. We also expect a big squeeze if market senses a trade deal between US-China. In this case, 1.1500/1.1550 is an initial target.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts.