EUR/USD – Euro Pauses For Breath After Dismal Week

Fundamental analysis of Forex market

EUR/USD is unchanged in the Friday session. Currently, the pair is trading at 1.1341, up 0.02% on the day. On the release front, Germany’s trade surplus widened to EUR 19.4 billion, above the estimate of EUR 18.3 billion. With no U.S. events on the schedule, we’re unlikely to see much movement from the euro during the day.

It’s been a tough week for the euro, which has lost 1.0 percent. The euro lost ground on Thursday after the release of the European Commission economic forecasts. The EC has projected moderate growth in the EU, but plenty of uncertainty has dampened confidence. The forecast lowered its growth forecast for the eurozone to 1.9% in 2018, down from 2.1% in the November forecast. For 2019, the growth forecast has also been revised down to 1.5%, compared to 1.9% in the November forecast. Inflation slipped in late 2018 due to lower oil prices, with an average inflation level of 1.7%. This is expected to dip to 1.6% in 2019. The report highlighted Brexit and the slowdown in China as key sources of uncertainty for European economies, adding that the projections were subject to downside risks.

The Federal Reserve does not hold its policy meeting until mid-March, so investors will be left to focus on remarks from Fed Chair Jerome Powell and his colleagues. The Fed raised interest rates four times last year, but economic conditions are very different in 2019. The U.S-China trade war has dampened global growth and rocked the equity markets. With the U.S. unlikely to replicate the sparkling growth we saw in 2018, the Fed is projecting just two rate increases this year. The markets, however, are predicting no rate moves, and some analysts are even talking about the possibility of a rate cut late in 2019

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