🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

German Seesaw: Weak Demand Weighs on the Euro, Lifts DAX

Published 03/28/2024, 10:51 AM

The EURUSD accelerated its decline on Thursday, losing for the third consecutive session and falling to a five-week low below 1.0790. The pair's downtrend has been in place since the 8th of March when the latest employment report was released. The pair then failed to reach the 1.10 level.
The EURUSD accelerated its decline on Thursday
The extended decline in EURUSD has turned the initially neutral technical picture into a negative one, with the formation of a "death cross". The 50-day moving average is about to fall below the 200-day average.

The still-strong economy remains on the dollar's side, pushing back the forecast for the first rate cut from March to June, bringing it almost in line with the ECB. It is also important to note that the ECB is expecting four cuts, compared to 2 or 3 for the Fed. The dollar is benefiting from this in the currency market.

At the same time, Europe is reporting weak domestic demand. German retail sales fell by 1.9% in February, the fourth consecutive month of decline. The year-on-year decline is 2.7%. The latest figure is a five-month low, but what is more worrying is the worsening trend.
DAX gains 10% so far this year
That hasn't stopped the DAX from gaining 10% since the start of the year, twice as much as the Dow Jones, and it has gained every week since the beginning of February, hitting all-time highs in the process. The weakness of the euro has been an important factor in the German market's outperformance, although not the main one.

The ECB's willingness to ease policy more actively than the Fed is potentially working against the euro and in favour of German equity exporters. Right now, for Germany, it works like a seesaw. 

The FxPro Analyst Team

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.