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

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

26.05.2023

Today's Highlights
  1. UK Retail Sales
  2. Canada: Fiscal Balance

In U.S. currency trading the previous day, the Canadian dollar rose slightly against the yen. The CAD/JPY pair rose from 102.100 to 102.841, a move of approximately 70 pips.From a technical perspective, the CAD/JPY pair is trading above the 20-period moving average (MA) on the hourly chart. However, on the 4-hour chart, it is forming an ascending wedge near recent highs, so traders 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 toward 70, so traders should keep a close eye on the direction of the trend.

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

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’sConsumer Confidence Index, and during European trading hours at 21:30, U.S. Personal Income, the U.S. Core PCE Deflator, U.S. Durable Goods Orders, and U.S. Wholesale Inventories; at 23:00, the U.S. University of Michigan Consumer Sentiment Index; and at 24:00, Canada’s Fiscal Balance.Please note that next Monday is a public holiday in the UK, the U.S., and Switzerland, marking the start of a long weekend, so traders should be cautious of price movements leading up to the holiday.

桜井 慶介

Author: Keisuke Sakurai

He has over 10 years of experience in FX trading. In the financial sector, he has been involved in investment management focused primarily on foreign exchange markets and has experience as an asset management advisor. Drawing on his extensive experience, he specializes in technical and fundamental analysis.

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