The Euro is experiencing hard times. Overview for 18.02.2019

The major currency pair recovered after plummeting, but the Euro shouldn’t let its guard down.

On Monday morning, EURUSD is trading quietly. The current quote for the instrument is 1.1290.

Last week, the comments from the European Central Bank representative Benoît Cœuré made the Euro plunge towards the levels it last reached in November 2018. A bit later, the European currency was able to recover. Cœuré told the media about a new tool for supporting the Area’s economy, TLTRO, because the economy was getting weaker than expected. It was a serious blow to the Euro: if the ECB does discuss it, then in reality everything could be much worse than it is seen right now. 

The European regulator shut down the QE program last December. It was done very carefully and in the end the ECB said that the European economy would no longer require any support and might operate on its own. However, now the regulator is believed to discuss another tools and mechanisms to support the European economy and that’s bad for the Euro and the reason it plunged last week.  

In this light, weak numbers from the USA were barely noticed by investors. After the Retail Sales report, which showed -1.2% m/m (market expectations were +0.1% m/m) due to downturn in fuel prices, there was another unimpressive reading, this time the Industrial Production. The indicator lost 0.6% m/m in January against the expected reading of +0.1% m/m. At the same time, the Capacity Utilization Rate also declined and was 78.2% against the expected reading of 78.8%.

These negative numbers were a little bit neutralized by the preliminary February report on the Consumer Sentiment from University of Michigan. The indicator was reported increase up to 95.5 points after being 91.2 points in January. It appears that the US economy is not feeling good due to volatile fuel prices, while consumers are quite happy with the current conditions. It’s a very interesting situation.  

Monday will be a quiet day for market players. Americans are celebrating the President’s day, so there won’t be any important statistics from the USA.