EUR/USD holds steady as US Dollar recoups, German growth forecast dims
- EUR/USD remains stable at 1.0807, with USD gaining ground amid anticipation of FOMC minutes.
- German economic growth projection for 2024 slashed to 0.2%, stoking recession fears.
- US Fed officials signal cautious approach to rate cuts, awaiting disinflation signs in labor and goods markets.
The EUR/USD pair is virtually unchanged in early trading during the North American session, as the Greenback (USD) trims some weekly losses, as the US Dollar Index (DXY) edges back above 104.00. At the time of writing, the major exchanges hands at 1.0807.
DXY rebounds over 104.00; German outlook and FOMC minutes eyed
The Eurozone (EU) economic docket was light, though news from Germany could weigh on the common currency. The German government updated its forecasts for 2024 expecting an economic growth of 0.2%, far less than the 1.3% previously foreseen. A weaker global demand, geopolitical uncertainty, and high inflation dent an economic recovery. In 2023, the economy shrank -0.3%, expected to enter a recession in the first quarter of 2024.
Regarding the economic situation, German Economy Minister Robert Habeck added, “Looking ahead, however, we see clear signs that the trend can improve again,” at a news conference presenting the annual economic report.
In the US, traders are awaiting the release of the latest Federal Open Market Committee (FOMC) minutes. However, the Richmond Fed President Thomas Barkin said the latest CPI and PPI reports were “less good,” showing the dependence of disinflation on goods. He commented that the labor market is improving while emphasizing the US has a “ways to go” to get a soft landing.
US Treasury bond yields had paired their earlier gains as investors await the release of January’s FOMC minutes. Since then, Federal Reserve (Fed) officials have expressed they are ready to cut rates but would not rush the beginning of the easing cycle. Later, the Atlanta Fed President Raphael Bostic will cross the wires.
EUR/USD Price Analysis: Technical outlook
Even though EUR/USD buyers regained the 1.0800 figure, the pair remains vulnerable to selling pressure after failing to reclaim the 200-day moving average (DMA) at 1.0826. If the pair slumps below 1.0800, look for a test of the day’s low of 1.0789 before tumbling toward February’s 20 low at 1.0761. Further downside lies at 1.0700, ahead of the last cycle low of 1.0694. Conversely, if buyers regain the 200-DMA, expect a test of the 1.0900 mark.
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