Single currency slumps as eurozone growth forecasts lowered
Eurozone growth falters
The euro currency moved sharply lower this week after the European Commission downgraded eurozone growth expectations and the German economy posted more weaker than expected economic data. The EC lowered eurozone growth forecasted to 1.3 per cent in 2019 after previously expected the European economy to grow by 1.9 per cent this year. Germany, the economic engine of the eurozone posted more weak data as it felt the effects of the slowdown underway in the global economy. Official data showed German Factory Orders tumbling by -7.0 per cent on a year-on-year basis, while also posting a worse than expected -1.6 per cent decline during December. The euro currency declined sharply lower against the greenback after the news that the ECB slashed its growth forecasts, with the EURUSD pair relinquishing most of its early-year gains.
- The EURUSD pair is strongly bearish while trading below the 1.1300 level, key support is found at the 1.1260 and 1.1215 levels.
- If the EURUSD pair trades above the 1.1410 level, further upside towards the 1.1460 and 1.1570 levels remains possible.
The British pound fell sharply lower against the US dollar this week after the United Kingdom economy posted much weaker than expected PMI Services data and the Bank of England lowered UK growth forecasts for 2019. The UK economy posted its worst PMI Services reading in over two years this week, as Brexit fears stopped UK companies from making important decisions. Further bad news came from the Bank of England, who kept interest rates on hold and significantly downgraded the United Kingdom’s growth prospects for 2019. The GBPUSD pair fell below the 1.2900 level but later recovered as positive headlines came from British PM Theresa May’s latest Brexit talks with EU officials in Brussels.
- The GBPUSD pair is only bullish while trading above the 1.3000 level, key resistance is found at the 1.3095 and 1.3205 levels.
- If the GBPUSD pair trades below the 1.3000 level, sellers may test towards the 1.2800 and 1.2740 levels.
The Australian dollar fell sharply lower against the US dollar this week after RBA Governor Phillip Lowe changed his language towards future rate increases. Governor Lowe said that the Reserve Bank of Australian has a balanced view towards future rate increases, after previously stating that the next rate move would likely be higher. The AUDUSD pair tumbled, as the change in policy language was taken as a sign that Reserve Bank of Australia officials are turning more bearish on the Australian economy. The Reserve Bank of Australia kept interest rates on hold this week as widely expected and acknowledged slowing global growth and pressures in the domestic property market.
- The AUDUSD pair is bearish while trading below the 0.7220 level, key support is found at the 0.7000 and 0.6930 levels.
- If the AUDUSD pair trades above the 0.7220 level, buyers may test towards the 0.7270 and 0.7300 resistance levels.
Cryptocurrencies drift lower
The market capitalization of the entire cryptocurrency market moved to a fresh 2019 trading low this week, as digital currency giants Bitcoin, Ripple and Etheruem remained under downside pressure. The top-three cryptocurrencies make up a significant portion of the cryptocurrency market cap, with Bitcoin accounting for over fifty per cent of the entire cryptocurrency market. The number one cryptocurrency continued to fall toward its 2018 trading low, while Ethereum slumped to a fresh 2019 trading low, as the ETHUSD pair briefly tumbled below the $100.00 level.
- The BTCUSD pair is only bullish while trading above the $3,660 level, key resistance is found at the $4,000 and $4,440 level.
- If the BTCUSD pair declines below the $3,120 level, sellers may test towards the $2,800 and $2,500 support levels.