EUR/USD Moves Lower After Weak 4Q GDP

The advance Eurozone GDP was weaker than expectations.  The figure showed that the quarter on quarter GDP fell by 1.5%, the largest since 1995.  Germany led the decline contracting by 2.1% for the quarter alone.  This is the 3rd decline for the largest European economy.

The decline increases the pressure on the ECB to cut rates and for nations, meeting this weekend at the G7 meeting to stimulate economies through coordinated fiscal policy measures (other points of topic include bank aid, and perhaps talk of currency value).  The decline should lead to further employment cuts which will keep inflation low within the Eurozone.  It will also keep the social unrest at high levels. It will not be a good time.

The weak data has the EURO under pressure this morning.  The EUR/USD is down. The EUR/GBP has down.  THe EUR/CHF is down.

The EUR/USD on the daily chart is moving back toward the trendline support.  The level currently comes in at the 1.2753.  The low yesterday (and for the week) was 1.2721 but the momentum stalled and the price rebounded.  The price action remains choppy.  The price action remains non-trending.  The market has to break one way or the other to get the market excited.

With no economic data due out, but the potential for G7 headlines, be on alert.  The market has a tendency to sneak up and grab you when you least expect it.  It could be one of those days.   Don’t be surprised.

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