Euro Latest: Euro Area Growth Flatlines, EUR/USD Dancing to Powell’s Tune

Euro Area q/q growth flatlined in the last three months of 2022, in line with market expectations, while y/y growth rose by 1.8%, a fraction under market forecasts, according to the Eurostat, the statistical office of the European Union. Greece (+1.4%) recorded the highest increase of GDP compared to the previous quarter, followed by Malta (+1.2%) and Cyprus (+1.1%). The highest decreases were observed in Poland (-2.4%), Estonia (-1.6%) and Finland (-0.6%). The Euro Area recorded growth of 0.3% in the third quarter.


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German data released earlier today showed retail sales weakening by more than expected while industrial production picked up sharply, beating forecasts easily.


EUR/USD is little changed post-GDP data and remains at, or very close to, lows last seen at the start of January. A further re-pricing of US interest rate expectations, fueled by Fed chair Jerome Powell’s hawkish testimony to the Senate yesterday, powered the greenback higher against a range of currencies and hit risk sentiment hard. US 2-year bond yields touched a fresh 15-year high of 5.04%, while markets are now pricing in a 50 basis point rate hike at this month’s FOMC policy meeting.

EUR/USD broke out of the bearish flag formation we have following recently and currently trades just below 1.0550. Big figure support at 1.0500 is likely to hold any further sell-off in the short term although if Friday’s US Jobs Report is stronger-than-expected, this level will come under heavy pressure. Below here, 1.0460 comes into play.

EUR/USD Daily Price Chart – March 8, 2023


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