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The data on the economy of Germany and the eurozone that was released in the morning made some confusion, since, on the one hand, business sentiment improved significantly, but the assessment of the current situation fell to historic lows. Apparently, the respondents surveyed positively perceived the measures of fiscal and monetary policy, which were a kind of response to the spread of coronavirus. However, in the long term, these measures will be clearly not enough, as they will shift their attention to the EU summit, which will be held this Thursday.
According to a report from the ZEW Science Center, the indicator of economic expectations in Germany in April 2020 rose after a significant drop in March. Thus, the index was 28.2 points in April against -49.5 points in March, while economists had expected the index to be -41.0 points.
However, as I noted above, the assessment of the current economic situation has significantly decreased. The ZEW current conditions index fell to a record -91.5 points in April against -43.1 points in March this year. Economists had expected the figure to be -77.5 points. ZEW noted that a similar range of indicators was observed during the global financial crisis in May 2009.
Given the large growth in Germany, the index of economic expectations also rose in the whole eurozone. A report from the ZEW Science Center indicated that the index returned to positive territory, reaching 25.2 points from -49.5 points in March. However, the assessment of the present situation in Germany was not the best. The index fell to -93.9 points from -48.5 points in March.
The technical picture of the EUR/USD pair remained unchanged after an unsuccessful attempt to grow the euro above the level of 1.0850 against the background of positive statistics. Break of support 1.0815 will increase pressure on the trading instrument and push it to the lows of 1.0770 and 1.0715. If the bulls manage to regain control of the market again, which will happen only after the EUR/USD trades above 1.0850, then we can expect a larger increase to the highs of 1.0890 and 1.0940.
GBPUSD
Pressure on the British pound continues to persist even after a report showing that the number of applications for unemployment benefits in March was not as scary as economists had suggested. However, a sharp decline in earnings has returned the bears to the market, which brought down the pound, which has been experiencing problems with recent growth.
According to the data presented, the number of applications for unemployment benefits in March 2020 in the UK increased by 12,100, while economists expected them to increase immediately by 50,000. The unemployment rate itself jumped to 4.0% against 3.9%. It is expected that growth will continue further, and will reach 6.5% over the summer period. Let me remind you that recently the UK finance minister announced that the wage subsidy program will be extended until June this year and will be completed only when a successful fight against rising unemployment is noted against the backdrop of the coronavirus pandemic.
As for the technical picture of the GBP/USD pair, apparently, the immediate target of the bears will be the area of 1.2280, a breakthrough of which will return the pair to the April minimum at 1.2180. Pound recovery will be limited by the nearest resistance at 1.2360 and 1.2410.
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