In the first half of the day, reports on the eurozone economy did not allow buyers of risky assets to resume demand for the euro and continue the upward correction. The industrial production report disappointed traders due to a contraction for the second month in a row.
According to the EU Statistics Agency, industrial production in the eurozone fell by 0.3% in March compared with February. Compared with the same period of 2018, production decreased by 0.6%. The data fully coincided with the forecast of economists and not much impact on the euro.
The negative impact on production was due to a weakening demand for goods from the eurozone in China, as well as the UK. The trade conflict with the United States is also making itself felt, although since the middle of last year, eurozone authorities have still managed to avoid introducing new duties. However, this is not connected with the actions of the EU representatives, but with the people from the White House, which spends all its energy on a trade war with China.
The data released today on the index of economic expectations in Germany is also unlikely to have been able to please investors because of its sharp fall in value in May of this year, which is directly related to restrained economic growth.
According to the report, ZEW Institute's index of economic expectations dropped to -2.1 points in May from a positive value of 3.1 points in April. Economists had expected the index to rise to 5.0 points in May. The long-term average of this index is 22.1. ZEW noted that the escalation of the trade conflict between the United States and China exacerbates uncertainty about German exports. The current conditions index ZEW rose to 8.2 points in May.
In the first half of the day, a report was also published on the trust of owners of small companies in the United States, where growth was reported, which is observed for the third month in a row. This suggests that a small business in the United States is doing quite well and is optimistic about the future, even in spite of trade wars.
According to the report of the National Federation of Independent Business, the US Small Business Optimism Index was 103.5 points in April against 101.8 points in March. The growth is due to strong sales, as well as improved credit conditions.
As for the technical picture of the EURUSD pair, most likely, the pressure on the euro will continue in the afternoon. Bears will try to breakthrough below the support of 1.1220, which will only increase the pressure on risky assets and lead to a larger sale of EURUSD to the area of lows of 1.1180 and 1.1140.
The material has been provided by InstaForex Company - www.instaforex.com