01.02.201908:28 Forex Analysis & Reviews: Euro risks to continue falling

The single European currency in the world currency market came under pressure, which is most pronounced in tandem with the US dollar.

Euro currency at the end of the trading session on Thursday almost completely lost the news of its growth in tandem with the US dollar, which itself came under extensive sales due to the Fed's decision to make the dependence of further increases in interest rates on the dynamics of the US economy, as well as the overall financial market conditions. On Thursday, the euro fell markedly under the influence of a number of negative data on the German economy, which is a leader in Europe and the eurozone.

According to the data presented, the volume of retail sales in Germany fell in December by 2.1% against the growth in the previous period under review by 1.1%. On an annualized basis in December, the indicator showed a strong decline of 4.3% against a year earlier growth of 1.4% and expectations of a decline of only 0.5%. Also added fuel to the fire and employment data, which showed a decrease in the number of unemployed by 2,000 in January. In December, the indicator was measured at -14,000 and it was assumed that the January value would show a decrease of 11,000.

In addition to these data, GDP was published for Spain, which maintained a growth rate of 2.4%, Italy, where the risk of dumping the local economy in recession and the eurozone, in which the growth rate of the economy hung in quarterly terms at around 0.2%, and continued to drop 1.2% from 1.4%.

The ECB is very worried about the economic situation in Italy, which already shows a negative trend in quarterly data. Thus, in the fourth quarter of 2018, the country's economy shrank by 0.2% against a decrease of 0.1% earlier. Annual GDP shows growth at the level of statistical error by 0.1% versus 0.6% a year earlier and expectations are for a 0.3% increase.

Similar data, which may be slightly better or slightly worse, is also observed in other eurozone member countries. Such dynamics may be the reason that the ECB not only does not dare to raise interest rates this year but may even be forced to secretly resume measures to stimulate the region's economy. In this case, the single currency risks to continue falling in the foreign exchange market.

Today, data on consumer inflation in the eurozone will be published, and if they again show a slowdown in growth, this will stimulate further local depreciation of the euro currency.

Forecast of the day:

The currency pair EUR / USD is above the level of 1.1425, pending the publication of data on consumer inflation in the eurozone. If they show a decline, and employment values in the United States, on the contrary, are positive, the pair may, breaking the level of 1.1425, fall to 1.1365. At the same time, if the data from the United States turns out to be negative, and the rate of consumer inflation in the eurozone continues, the pair may locally grow to 1.1500-1.1515.

The currency pair USD / JPY is below the level of 109.00. Negative news from the US labor market may cause the pair to continue to decline to 108.00. Positive, on the contrary, will contribute to its growth to 109.65.