The European currency continued to trade in the side channel in tandem with the US dollar after the release of fundamental data indicating a further slowdown in the growth of the European economy.
According to the report, growth in bank lending to euro zone companies in January of this year slowed sharply, which is another signal to weaken the economic growth of the region.
According to the European Central Bank, lending to companies in January 2019 grew by 3.3% compared with January of the previous year, after growing by 3.9% in December. The M3 money supply indicator in January rose by 3.8% compared with the same period of the previous year, after rising 4.1% in December. Economists had expected the growth of the M3 indicator in January to be 4%. Household lending in January increased by 3.2% compared with the same period of the previous year, as in December.
The decline in lending is directly related to growing concerns about international trade, as the eurozone economy is highly dependent on the availability of financing.
The weak report, testifying to the deterioration of their own prospects for companies in the eurozone, also affected the optimism of traders, putting on further growth of the euro. According to the European Commission, the sentiment index in the eurozone economy in February of this year fell to 106.1 points from 106.3 points in January.
The eurozone consumer confidence index rose slightly in February. According to the report, the confidence index rose from a negative level of -7.9 points to -7.4 points, fully coinciding with the expectations of economists. The business climate index remained unchanged, at the level of 0.69 points.
In the morning, a presentation was made by a member of the governing council of the European Central Bank, Jens Weidmann, who said that there was no reason for excessive pessimism about the prospects for the German economy. Let me remind you that Weidmann is the president of the Central Bank of Germany.
He also noted that the ECB had begun the process of normalizing its monetary policy, which is likely to be gradual and take several years. Weidmann also warned that the risks and side effects of the ECB's soft policies should not be underestimated. Let me remind you that he is a supporter of a tighter monetary policy and has repeatedly criticized the European regulator for zero interest rates.
In the second half of the day, all the market's attention will be focused on the speech of US Federal Reserve Chairman Jerome Powell, who will continue his speech on the state of the US economy and monetary policy. Powell's speech before the House Financial Services Committee is scheduled for 3:00 p.m. Most likely, nothing new after yesterday's speech Powell will not say. However, immediately after the speech, the Fed Chairman will answer questions, which is a more interesting point.
As for the technical picture of the EURUSD pair, only a confident breakthrough and fixing above the resistance of 1.1400, which I personally doubt very much, will allow us to expect new highs in the area of 1.1430 and 1.1460 to be updated with the trading tool. A more interesting option for purchases will be a correction to support 1.1345 and 1.1315.
The material has been provided by InstaForex Company - www.instaforex.com