The eurodollar gained against the greenback in the European session yesterday following the release of better-than-anticipated German GDP data for 4Q 2020. However, the US dollar regained the lost ground in the US session after new home sales data was overwhelmingly positive.
Notably, the US crude inventories’ unexpected increase also helped the greenback hold ground against the eurodollar. In the last 24 hours, the EUR/USD pair remained range-bound between 1.2110 and 1.2180.
According to the final estimate published by the German statistical agency Destatis, the country’s economy grew 0.3% q-o-q in the December quarter, following an increase of 8.2% in the September quarter. The reported reading was more significant than the initial estimates of 0.1% growth. Economists had anticipated no change in the initial estimates.
Notably, Destatis also amended its FY 2020 GDP growth to -4.9% from a prior estimate of -5.0%.
During the fourth quarter, the economic rebound slowed down due to the next wave of Covid-19 infections and subsequent lockdowns enforced at the end of December. Compared to the pre-pandemic February level, the country’s GDP in the December quarter declined 3.7% y-o-y.
Private household spending dropped 3.3% in 4Q 2020, compared to the earlier quarter. The country’s construction industry and also overseas trade, on the contrary, grew and contributed to the increase in GDP.
Concerning fourth-quarter and 2020, Destatis stated that “development was slightly more positive” than recorded in a first estimate four weeks back.
According to the US Census Bureau and the Department of Housing and Urban Development, new single-family houses’ sales increased to 923,000 units in January, from 885,000 units in December, and surpassed the 853,000 units anticipated by economists. The reported figure is 19.3% higher than the 774,000 units reported for January 2020.
The median sales price of new houses was $346,400 in January 2021, while the average sales price was $408,800.
According to the data published by the Energy Information Administration, crude oil inventories increased by 1.30 million barrels in the week ended February 20, 2021. Economists had anticipated a decline in the crude inventories by 6.50 million barrels. In the previous week, crude inventories decreased by 7.30 million barrels.
At 463 million barrels, the US crude oil inventories roughly match the comparable period’s five-year average.
An increase in the crude inventories will harm the crude price and positive impact on the greenback.
The positive economic data from both the US and Germany is expected to keep the EUR/USD pair range-bound with a slight bullish bias.
The EUR/USD price chart indicates that the currency pair ascends after testing the support at 1.2080. The next resistance is anticipated only near 1.2300. Additionally, the MACD indicator has a positive reading. Therefore, we are anticipating the currency pair to rally in the days ahead.
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