The euro’s correction maybe over
Hard data shows that the Eurozone economy have never been in a better shape since the crisis. This is also reflected in the renewed strengths of the euro since the beginning of this year. Most euro analysis contended during the summer that the appreciation of the European currency will hurt the continent’s economy. Recent data, however, showed that European growth has stable foundations. On Tuesday (14th November) important data will be published by statisticians which may either prove or refute the idea of a healthy and strong European recovery.
First, German HICP inflation and three hours later European GDP growth volumes along with the German ZEW index will be published followed by a speech by Mario Draghi.
Looking at the technical picture, the euro is correcting its previous runup since the beginning of September. This, however, seems to be just a shallow correction so far, breaching only the 23.6% Fibonacci support level after dovish comments by Mario Draghi on 26th October and better than expected US GDP growth on the next day. However, the rate later risen back up to the 23.6% Fibo level which now serves as a resistance.
Any surprise to the upside in inflation and GDP would help the euro to break that resistance and rise to the upper boundary of its current trading range.
On the other hand, disappointing data plus more dovishness from Draghi may cause deeper correction until the 38.2 percent support level where the upper boundary of a previous trading range may also give a footing to the pair.
So, keep an eye on these important data as it can cause serious volatility in the euro/dollar exchange rate!