Should We Be Wary of Euro Movements as Germany Enters a Technical Recession?

Should We Be Wary of Euro Movements as Germany Enters a Technical Recession?

26.05.2023

In yesterday’s U.S. currency markets, the Canadian dollar rose slightly against the yen. The CAD/JPY pair climbed from 102.100 to 102.841, a move of approximately 70 pips. Technically, the CAD/JPY pair has been trading above the 20-period moving average on the hourly chart; however, on the 4-hour chart, it has formed an ascending wedge near the high, so we should be wary of a pullback as the market consolidates.On the other hand, on the weekly chart, the RSI still has room to rise to 70, so we should pay close attention to the direction of the trend.

European currencies saw the euro trade in a tight range against the pound after Germany’s first-quarter GDP, released yesterday, came in at -0.5% year-on-year—marking the second consecutive quarter of contraction and placing the euro in a “technical recession.” The EUR/GBP pair fell to 0.8665 before rebounding to 0.8705. It closed slightly higher, just below the daily 200-day SMA.During today’s Asian session, the EUR/GBP pair has been rising, supported by the hourly 20-MA, so we will be watching for a potential rebound in the euro during the European session.

Today, during Asian trading hours, UK retail sales and Sweden’s producer price index and retail sales will be released at 15:00; Swiss non-agricultural employment figures at 15:30; and France’s consumer confidence index at 15:45. During European trading hours, US personal income, the US core PCE deflator, US durable goods orders, and US wholesale inventories are scheduled for 21:30,at 11:00 PM, the US University of Michigan Consumer Sentiment Index, and at 12:00 AM, Canada’s fiscal balance. Please note that next Monday is a public holiday in the UK, US, and Switzerland, marking the start of a long weekend, so we should be cautious of price movements leading up to the holiday.

Past Market Reports

1. 21.04.2026New

   With the euro-Australian dollar pair hitting new lows this month, attention is turning to how much further it might fall

2. 20.04.2026New

   Will the market wait and see how much further the U.S. dollar can rise against the yen?

3. 17.04.2026New

   Will the weakening Swiss franc recover? Attention is turning to price movements during European trading hours.

4. 16.04.2026New

   Market participants are likely keeping a close eye on the upside potential of the euro, which has risen against the U.S. dollar

5. 15.04.2026New

   Should we keep an eye on remarks by key figures in the U.S. and try to gauge the direction of currency strength?

6. 14.04.2026

   Market participants are likely watching for signs of a rebound in the Canadian dollar, which fell against the U.S. dollar following the release of employment figures

7. 13.04.2026

   Will the weakening Swiss franc continue to strengthen against the yen, or should we wait and see?

8. 10.04.2026

   Will the U.S. dollar, which has fallen against the yen, continue its downward slide, or should we wait and see how the market moves?

9. 09.04.2026

   Should we keep an eye on the upside for European currencies that have risen against the U.S. dollar?

10. 08.04.2026

    Market participants may be wary of further downside potential for the U.S. dollar, which has weakened amid concerns over the situation in Iran