According to the data, the confidence of eurozone companies grew in May due to the good growth of the economy at the beginning of this year. This helped to smooth out the situation with weak exports, which will still manifest itself in the 2nd quarter of this year.
Growing consumer confidence will certainly support the eurozone economy, but activity will remain quite restrained. According to the European Commission, the sentiment index in the eurozone economy rose to 105.1 points in May from 103.9 points in April. Economists had expected the indicator to fall to 103.8.
It is worth noting that due to the trade wars that have been waged by the White House administration for more than a year, the sentiment of eurozone producers gradually deteriorated because of the weakening external demand for goods from Europe. The situation will most likely get worse, since after the "solution of the problem with China", the United States will clearly return to a trade war with the EU.
As for the consumer confidence index, it was -6.5 points in May against -6.5 points in April, which fully coincided with economists' forecasts.
The index of confidence in the eurozone industry in May pulled closer to zero and was at the level of -2.9 points against -4.3 points in April. Although, it was predicted not to change. The index of confidence in the services sector of the eurozone in May continued to grow and amounted to 12.2 points against the forecast of 11.8 points.
Data on lending in the euro area also turned out to be good news for traders and supported the euro in the current conditions of uncertainty.
According to the report of the European Central Bank, household lending grew by 3.4% in April of this year after rising by 3.3% in March, which will certainly support retail sales and weaken economic growth in the 2nd quarter of this year. Lending to companies grew even more in April, amounting to 3.9% against 3.6% in March.
As a result, the Eurozone M3 monetary aggregate increased by 4.7% in April with a growth forecast of 4.4%. Moreover, the Eurozone M3 monetary aggregate from February to April increased by 4.5%.
However, reports alone are not enough to return the demand for the European currency. From a technical point of view, the correction is not yet complete, and a breakthrough in support of 1.1170 will only increase the pressure on the euro. More acceptable purchase levels can be traced at 1.1150 and 1.1110 lows. If the demand for the euro returns and a weak report on consumer confidence in the US may help the bulls in the afternoon, a break of the resistance at 1.1200 will lead to the formation of a new upward wave in risky assets and an update of large levels in the range of 1.1220 and 1.1250.
The material has been provided by InstaForex Company - www.instaforex.com