Europe’s locomotive, Germany, saw its economy squeeze by 0.6% in the fourth quarter of 2012. Expectations stood on 0.5% contraction. This is the first contraction in a year: the economy’s output fell by 0.2% in Q4 2011, and enjoyed three quarters of growth since then (+0.5%, +0.3%, +0.2%). Year over year, the economy grew by 0.1%.
EUR/USD is trading around 1.3420 at the moment. It fell towards the release and is now extending its fall and getting closer to the 1.34 line.
Update: EUR/USD now falling below the 1.34 line. The German economy has been the motivation for investing in the euro for long months. Graph also updated.
It’s important to note that early signs from Q1 show that Germany may have returned to growth and probably escaped an official recession: two consecutive quarters of contraction.
Earlier, France reported a contraction of 0.3%, a bit below expectations for a squeeze of 0.2%. We will later receive data from Italy (9:00 GMT) and for the whole euro-zone (10:00). Also Japan reported a disappointing GDP figure: a third consecutive contraction.
EUR/USD made an attempt to break above the 1.3486 line yesterday, but this was very short-lived, and the pair went back to the 1.34-1.3486 range. Below, 1.3350 provides support. Above, 1.3588 is strong resistance. For more lines, see the euro to usd forecast.
