Apparently, the euro is tired of constantly having the same fundamental data indicating a slowdown in the European economy, because, despite the next row of weak statistics in Germany, the EUR / USD pair maintained its corrective upward movement in the first half of the day.
As it became known today, the Ifo business confidence index in Germany in January 2019 was lower than expected. This is another confirmation of the fact that the monetary policy of the European Central Bank will remain soft for a very long period.
According to the report of the Ifo Institute, the preliminary index of business sentiment in January 2019 fell to 99.1 points against the December value of 101.0 points. Economists had expected the index to remain above 100 points and reach 100.6 points. In Ifo noted that recent data suggests that the German economy is experiencing a slowdown after the growth cycle.
A survey of economists at the European Central Bank was also published today, in which a number of analysts revised their expectations regarding economic growth and inflation for the eurozone. The main reason for the revision was the weak economic data and problems in world trade.
According to the European Central Bank, respondents expect that eurozone GDP growth in 2019 and 2020 will drop to 1.5%, whereas previously they predicted an increase in eurozone GDP by 1.8% in the current year and by 1.6% in the next.
As for the inflation forecast, it was also lowered for this year, 1.5% from 1.7%. In 2020, inflation in the eurozone is expected to be 1.6%, not 1.7%, as previously assumed. Let me remind you that the target inflation rate, indicated by the ECB, is slightly below 2%.
As for the technical picture of the EUR / USD pair, the demand for the euro is unlikely to hold out above the resistance level of 1.1340 for a long time, and a return under this range will be a signal to close a number of long speculative positions, which will lead to increased pressure on risky assets and updating the minima in the 1.1305 area to support 1.1270.
