The euro managed to stay near the lows of the day and even recover slightly after a weak report on the growth of the German economy and the eurozone, which was quite predictable.
According to the data, the German economy in the 4th quarter of 2018 was on the verge of a recession, which, of course, of course, goes against the plans of the European Central Bank, which wants to raise interest rates this summer.
The situation is largely due to uncertainty about the prospects for world trade. Here we are talking about the threat of an increase in US tariffs on imports of cars from Europe, as well as the possible withdrawal of the UK from the EU without a trade agreement. As for the internal problems in Germany itself, it is necessary to note the automotive and chemical industry.
According to the report of the Federal Bureau of Statistics of Germany, Germany's GDP remained unchanged and showed zero growth in the 4th quarter of this year compared to the 3rd quarter. Economists had predicted that the German economy would grow 0.1% with a correction, but even that would hardly have changed anything in future forecasts. On an annual basis, Germany's GDP grew by 0.6% in the 4th quarter, and was projected at 0.8%.
The Bureau of Statistics of Germany also noted that investment and consumption supported GDP in the 4th quarter, but there is a serious decline. Foreign trade did not contribute to Germany's GDP in the 4th quarter.
Immediately after the release of this report, the economists of Deutsche Bank lowered the forecast for German GDP growth for this year. As noted by the bank, the forecast of annual GDP growth in Germany was revised to 0.5% from 1%.
Traders were also slightly pleased with the report on the growth of the eurozone economy as a whole, which fully coincided with the forecasts of economists.
According to the data, the eurozone GDP in the 4th quarter was also on the verge of a recession, an increase of only 0.2% compared to the 3rd quarter. On an annualized basis, the eurozone economy grew by 1.2%. The problems in the eurozone are exactly the same as in Germany, which is the flagship economy. Brexit and the global trade crisis were the main reason for European economy's weak growth.
Regarding the increase in the labor force, which correlates with the state of the economy, today's report shows an increase of 0.3% in the 4th quarter of 2018 compared to the 3rd quarter. The data were only slightly better than economists' forecasts.
As for the technical picture of the EURUSD pair, it remained unchanged. Buyers still need the fastest possible return to the resistance level of 1.1290, only above which will the demand for risky assets increase, which will lead to an update of weekly highs around 1.1340. In case the EURUSD pair declines below the support of 1.1250, the main goal of the bears will be to update a low of 1.1180.