12.07.201914:56 Forex Analysis & Reviews: EURUSD: The sharp increase in industrial production in the eurozone did not help euro buyers

The European currency ignored the good data on industrial production in the eurozone, which in May of this year increased sharply. The weak demand for the euro is directly linked to the recent report of the European Central Bank, which is seriously considering the introduction of new monetary stimulus measures, including lowering interest rates.

The powers of the current ECB President Mario Draghi will end in a few months, and most likely, he will try to do everything to leave his post on a major note, having established itself as a manager who pulled the European economy from the crisis pit.

Let me remind you that Christine Lagarde, who is currently the managing director of the International Monetary Fund, has been appointed as his successor. Her position also indicates a desire to continue a soft policy.

Even despite the weakness of the US dollar, in the medium term, such news will not have a good impact on the exchange rate of the European currency, which will weaken the position of risky assets even more.

As for the data from the statistical agency Eurostat, industrial production in the eurozone in May this year increased by 0.9% compared to April, indicating a larger GDP growth in the 2nd quarter of this year. However, compared to the same period of the previous year, production decreased by 0.5%. The growth was due to high demand and production of consumer goods.

The strongest increase in production by 2.1% was recorded in France.

It is worth noting that the manufacturing sector of the eurozone suffered greatly at the beginning of this year due to a sharp decline in exports against the background of trade wars, which slow down the overall growth of the world economy. The European Central Bank has repeatedly noted the weakness of the manufacturing sector, which exerts significant pressure on the rest of the economy, and this is another argument in favor of the introduction of incentive programs.

Today, a report from WSJ economists was published, which stated that criticism of the Fed's policy by Trump did not cause serious damage to the idea of the independence of the Central Bank. At this point, the current Chairman of the Fed, Jerome Powell, has repeatedly drawn attention.

Also, more than 68% of the economists surveyed predict a decline in Fed rates at the July meeting, which, apparently, has already been taken into account by the market, and most likely, it will not have a serious impact on the quotes of the US dollar. By the end of this year, the committee is expected to lower the key interest rate for the second time to 2.00%.

As for the recession, its onset is estimated at 30.1% over the next 12 months.

The technical picture of the EURUSD pair remained unchanged, and the whole emphasis in the afternoon will be on data on producer prices in the US. If they are better than economists' forecasts, the demand for the US dollar will increase. The support breakout of 1.1230 will lead to larger levels around 1.1200 and 1.1160.