The euro remained range-bound against the greenback yesterday following the release of better-than-expected economic data from Germany and the US. While Germany’s second-quarter economic growth surpassed estimates, the US first-time unemployment claims exceeded forecasts. Overall, the EUR/USD pair traded in a narrow range of between 0.9949 and 1.0033.
The German economy expanded by 0.10% q-o-q in the June 2022 quarter, following a 0.80% GDP growth in the prior quarter. The preliminary estimates reported a flat reading. Economists did not anticipate any change in the preliminary estimates.
The German ifo business climate index inched lower to 88.50 in August, from 88.70 in July, but bettered the forecasts for a decline to 86.80. The reported figure reflects the lowest level since June 2020.
Sector-wise, the manufacturing business climate index was -6.90, unaltered from the previous month. The service sector business climate index improved to 1.30, from 1. The trade sector index worsened to -25.80, from -21.60. The construction sector index improved to -14.50 in August, from -16.20.
Overall, the German situation index fell to 97.50, from 97.70. Likewise, the expectations index inched lower to 80.40, from 80.30.
According to the US Department of Labor, the country’s first-time unemployment claims fell to 243,000 in the week ended August 20, from 245,000 (downwardly amended from 250,000) in the prior week, and surpassed the market’s expectations for jobless claims of 250,000.
The four-week moving average was 247,000, compared with 245,500 (downwardly revised from 246,750) in the earlier week. In the week ending August 20, the advance figure for seasonally adjusted initial claims was 243,000, a decrease of 2,000 from the previous week’s revised level.
According to the second estimate published by the Bureau of Economic Analysis, the US economy shrank 0.60% q-o-q in the June 2022 quarter, following a GDP contraction of 1.60% in the March 2022 quarter, but better than the 0.90% decline forecast in the advance estimate. Economists had anticipated the US economy to contract 0.70% in 2Q 2022.
Current-dollar GDP rose by 8.40% (or $496.20 billion) annually in the June quarter to $24.88 trillion.
The price index for gross domestic purchases grew by 8.40% in Q2 2022, an increase of 0.20% from the earlier estimate. The figure was in line with economists’ expectations.
Disposable personal income rose by 6.50% (or $287 billion) in the June 2022 quarter, downwardly revised by $4.40 billion from the prior estimate. Also, personal savings stood at $945 billion in Q2 2022, downwardly revised by $23.4 billion from the earlier estimate.
The better-than-anticipated economic data from both countries are expected to keep the EUR/USD pair range-bound in the next few trading sessions.
Technically, the EUR/USD pair is facing heavy resistance at 1.0035. The next major support is anticipated only near 0.9800. Additionally, the currency pair is trading below its 50-day moving average while the stochastics indicator is declining towards the bearish zone. Therefore, we anticipate the currency pair to remain in a downtrend in the short term.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
