EURUSD advanced last week on the weak dollar and gross domestic product results that exceeded economist expectations. Germany and France were the key winners, again, but there meager growth is nothing to be jealous about. Germany expanded .4 percent, outdoing expectations of .3 percent. France expanded .3 percent, edging out the .2 percent expectation. The whole eurozone only grew .4 percent in the fourth-quarter, according to the European Union’s statistics office.
Optimistic economists believe this is the growth that will ease pressure on the European Central Bank (ECB), but when Germany is considered the economic “stronghold” and only reporting a 1.3 percent GDP year-over-year, there is a problem. The ECB has a big mess to deal with as economic development treads water and chatter of negative deposit rates circulate. ECB President Mario Draghi feels that more information is need to determine further policy, as if the last six years has not been enough. “We are willing and we are ready to act,” Draghi states, as he has done numerous times before.
The EURUSD has likely rallied with risk assets rather than its own fundamentals. The dollar remains weak, which also helps. The daily chart shows little movement after the GDP-related spike in the pair on Thursday. Price action bounced off resistance at 1.3715, but remains positive to close the week.
Resistance is layered tightly, and price action would need momentum to push through the multiple levels. Resistance is found at 1.3760 and 1.3800. There is more room between solid support levels, which could lead to a decent sized pullback. Support is located at 1.3670, 1.3600 and 1.3550.
Next week will have an impact on EURUSD. The US will see data releases on the housing sector, consumer prices and the FOMC minutes. Fed chair Janet Yellen will give more Congressional testimony. The German ZEW economic indicator, and the flash manufacturing PMIs from both Germany and France will have a high impact on the euro.