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Germany GDP Contracts YoY; France in Technical Recession

by on May 15, 2013 6:32 am GMT
 

Germany’s GDP data falls short of analyst forecasts of .3 percent at .1 percent month-over-month and contracts deeply year-over year at -1.4% versus estimates of .2 percent, but this is reported to be partly due by calendar factors. Nevertheless, this continues to show the weakened state of the Eurozone economic outlook and may prompt more action from the European Central Bank.

The EURUSD dropped on the news and France’s -.02 percent GDP number (-.1 percent forecasted; France is now in technical recession) did not help the mix. Looking at the daily chart, the euro has seen hard downward pressure after failing to surpass the 1.32 level (currently 1.2905 as of writing this article). I see short-term targets at 1.2845 (roughly the 23.6 percent Fibonacci retracement) and 1.275 and 1.265. Currently, the RSI is slightly above 30, yet currencies can remain overextended for long periods without a pullback. A daily close below 1.29 will pave the way for more downside.