Eurozone QE Helps Relieve Deflationary Pressure
Today’s Spotlight Market
The Euro is lower against the US Dollar this morning, despite positive economic news from Germany. The currency is suffering from lingering fears that Greece will not be able to obtain funding before government coffers run dry in 3 weeks.? European indicators have been positive of late, which offer some support to the pan European currency. ?
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Fundamentals
German unemployment hit 6.4% in March, which is a record low for the nation. This could be seen as a sign that the private sector is strengthening. German consumers have been spending more due to lower unemployment and cheaper petroleum prices. Low interest rates also give little incentive to save. The improvement in the German economy could, however, also fuel public resentment toward Greece, which is in need of yet another bailout. This could make future bailout negotiations near impossible to support. European inflation increased to -0.1% from -0.3% in February. This could be seen as a sign that quantitative easing could be benefitting the Eurozone.? Europe has been fighting deflationary pressure for some time, so this is a good start, but Europe is definitely still at risk when it comes to deflation.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the Euro bouncing off the 1.0500 support level, which is the last line of defense before parity with the greenback.? Prices had bounced back and tested 1.1000 before falling back, hinting at possible consolidation.? The June Euro has traded above the 20-day moving average over the past several sessions, suggesting that a near-term low could be in place.? The RSI indicator has recovered from oversold levels, which reached single digits.? The RSI is diverging from prices recently, hinting at possible near-term strength.
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