EUR/GBP Struggles for Momentum as Eurozone Growth Falters

Euro faces resistance against USD amid German economic contraction, while EUR/GBP struggles, trader sentiment shows.

EUR/USD, EUR/GBP and EUR/JPY – Prices and Analysis

The Euro’s recent trajectory against major currencies such as the US dollar and the British pound is under scrutiny today as key technical levels come into play amid mixed economic data from Germany.

The German economy, the Eurozone’s most considerable, continues to face headwinds, as official data from the Federal Statistics Office (Destatis) confirmed a contraction of 0.3% in GDP for the fourth quarter of 2023 compared to the previous quarter. Year-on-year figures also painted a bleak picture, with a 0.4% decline over the same period in 2022.

Ruth Brand, President of the Federal Statistical Office, remarked, “The German economy ended 2023 in negative territory. In the final quarter, declining investment dampened economic activity, while consumption increased slightly.”

This disappointing performance follows a trend of stagnation throughout the year, partly attributed to the persistently challenging global economic landscape.

Adding to the economic narrative, the latest German Ifo readings, released concurrently, reported a business climate index of 85.5, aligning with market expectations and showing a slight improvement over the previous month’s figure.

EUR/GBP Struggles for Momentum as Eurozone Growth Falters

The Euro’s ascent against the US dollar has encountered resistance in currency markets as it tests the 200-day simple moving average (200-SDMA). Although breaching this technical level briefly yesterday, the EUR/USD pair failed to close above it, signaling a potential barrier to further upside momentum. Analysts suggest that a confirmed break above the 200-SDMA could pave the way for focusing on the 50-day simple moving average (50-SDMA) and recent highs around the 1.0900 level, while immediate support lies near 1.0787 down to 1.0760.

Meanwhile, the EUR/GBP pair is experiencing a retreat from recent highs near 0.8500, with resistance forming around the 0.8580 mark. A breach below 0.8530 could see the pair revisiting prior support near the 0.8500 handle in the near term.

IG data indicates that retail trader sentiment reflects a bullish bias, with 72.75% of traders net-long on EUR/USD. However, recent changes in positioning show a nuanced picture, with fluctuations in both long and short positions suggesting some uncertainty among traders regarding the Euro’s near-term direction against the US dollar.

In summary, the Euro faces a complex mix of economic data and technical factors, with traders closely monitoring key levels as they assess the currency’s near-term trajectory against significant counterparts.

Disclaimer: The above analysis is based on market data available during writing and is subject to change as new information becomes available.

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