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The single European currency continued to grow non-stop for almost a month and a half. And now, apparently, this process was put to an end. And if this growth was largely due to the relative weakness of US macroeconomic statistics, now everything has somewhat changed. It turns out that the situation in Europe is a little worse than in the United States. However, a month and a half of constant growth has led to a terrible imbalance, and the euro being overbought is visible to the naked eye. And frankly, it is difficult to call what was observed on Friday a rebound. No correction has occurred yet. Nevertheless, the tension somewhat eased.
Preliminary data on GDP for the euro area for the first quarter actually turned out to be noticeably worse than in the United States. However, if you look at the quarterly data, then everything is very good, since the GDP fell by only 12.1%. Whereas in the United States - by 32.9%. However, this is only quarterly data. If you look at the annualized ones, the economy of the eurozone plunged by as much as 15.0%. But the US economy contracted by only 9.5% over the year. So there is a much larger recession in Europe. And yes, it is a record for Europe. This means that the euro's growth was largely based on false premises. Thus, it is rather surprising that the single currency did not sag so much.
GDP growth rates (Europe):
Practically nothing interesting will happen today. At least nothing like that is expected. Only the final data on the indices of business activity in the manufacturing sector will be released. But the market already took it into account when preliminary estimates were published. So any serious reaction to them is not expected for today. Thus, the index of business activity in the manufacturing sector of the euro area should rise from 47.4 to 51.1. Meanwhile, the indicator should rise from 49.8 to 51.3 in the United States. As you can see, the indices should rise above 50.0 points in both cases, which separates stagnation from growth. At the same time, the growth rate of the index is slightly higher in Europe than in the United States. Another thing is that the index is slightly higher in the US. And these factors will offset each other. But we can expect all this only if the totals coincide with the preliminary estimates.
Manufacturing PMI (United States):
The euro/dollar pair managed to move into the correction stage after a long upward move, returning the quote to the bottom of last Thursday's at 1.1740. Price changes of more than 150 points are an impressive size, but based on the scale of the upward move, this is a minor adjustment in five weeks, and sellers still have a lot to go down.
In terms of dynamics, high volatility indicators are recorded, which indicates the retention of speculative interest in the market.
Looking at the trading chart in general terms (daily period), you can see a vertical movement, where due to the speed of price change, there was a significant overbought in the market.
It can be assumed that if the price is consolidated below 1.1740, a downward move towards the values of 1.1700-1.1650 may occur, which will be expressed in a corrective movement.
An alternative scenario is considered in the case of a fix higher than 1.1810, which will lead to a reversal in the direction of the recent high.
From the point of view of complex indicator analysis, we see that the indicators of technical instruments on the minute and hour periods signal a sale due to Friday's corrective move. The daily period, as before, is focused on upward momentum.
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