Eurozone Q1 GDP growth was confirmed at 0.5% q/q, in line with the preliminary number and unchanged from Q4 last year. The annual rate fell back to 1.7% from 1.8% in the previous quarter. Developments across the Eurozone remain mixed, The still diverging developments are not making Draghi’s job any easier as the central bank is slowly moving towards phasing out its substantial stimulus.
German ZEW investor confidence rose to 20.6, slightly below expectations, but still up from 19.5 in the previous month. the current conditions indicator improved to 83.9 from 80.1 and the overall Eurozone expectations reading rose to 35.1 from 26.3. The ZEW institute said Eurozone economic prospects are generally improving and the data will add to the arguments of the hawks at the ECB. The executive board, however, remains cautious and officials are stressing that they want to see improvements in confidence showing up in real data, before taking the food off the accelerator. So for now the data backs expectations for a move to a neutral stance on rates in June, but the central bank is still far from actually scaling back stimulus.
EURUSD has broken higher, punching above 1.1000 and last week’s former trend peak at 1.1023. A fresh six-month high as been set at 1.1049, ahead of the German ZEW investor confidence reading, pulling back a little despite the data exceeding expectations. Initial EURUSD resistance can be noted within 1.105s area, while the next resistance levels can be considered at 1.1100 and 1.1130, which is also the confluence of 61.8 Fibonacci level pointed using last year’s peak. The high from last November at 1.1299, provides an upside marker.
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