EUR Builds on Yesterday’s Gains – RBA Halts QE & GOOGL to Report
EUR/USD => The pair looks towards 1.1250
Alphabet => The stock trades at a 10-day high
AUD/USD => The pair falls towards 0.7050
EUR/USD Holds above 1.12 Ahead of Retail Sales
EUR/USD rebounded yesterday, rising 0.8% and paring at least some of the 1.7% lost in the previous week. The euro recovered amid news that the eurozone economy grew 0.3% in the final quarter of the year. Whilst this was a slowdown from Q3, it was in line with forecasts. Strong growth in Spain, Italy, and France offset weakness in Germany and Austria which were harder hit by COVID. German inflation data was also in focus, falling in January, although remains well above the ECB’s 2% target.
Today, attention remains on the economic calendar with the release of German retail sales and manufacturing PMIs from the eurozone. German retail sales are expected to fall in December after consumers stayed away from the shops to avoid Omicron.
|Ger. Inflation YoY
EU GDP Q4 QoQ
Ger. Retail sales MoM
|Actual: 4.9% (0.4%)
Actual: 0.3% (1.9%)
Expected: -1.2% (1.8%)
What’s Next for EUR/USD?
EUR/USD trades below its falling trendline dating back to mid-September, and below its 50 & 100 sma in a bearish longer-term trend. More recently EUR/USD is rebounding from the 2022 low. It has retaken 1.1190 January 24 low and 1.1200 round number, exposing the 50 sma. A move above here could negate the downtrend, whilst buyers will be looking for a move over resistance at 1.1390 a level which capped gains several times across December and early January, opening the door to 1.1480, the 2022 high. A move above here would change the bias to a bullish trend.
Alphabet (GOOGL) Q4 Earnings Preview
Google parent Alphabet is due to report Q4 earnings after the close. The data comes after Alphabet tumbled just shy of 7% across January. Wall Street expects revenue to rise 26% to $71.83 billion, an increase from $56.90 billion in the same period the year earlier. Meanwhile, earnings are set to rise 17% to $26.48, up from $22.54 in Q4 2020. Advertising revenue is expected to hold up better than its peers which suffer more from the negative headwinds from Apple’s privacy change.
AUD/USD Falls Post-RBA Meeting
The Aussie outperformed its major peers on Monday, lifted by the risk-on mood in the market and on optimism surrounding the RBA meeting. However, that optimism was soon shut down and today the Aussie is heading lower. The Reserve Bank of Australia voted to keep interest rates unchanged at 0.1%, a historically low level. The central bank did end its pandemic era bond purchasing program from this month. Philip Lowe, the RBA governor made it clear that the end of bond-buying didn’t mean that an interest rate would be coming soon. His comments pushed back market expectations of a hike in the coming months, pulling the Aussie lower. Dismal retail sales are also weighing on AUD.
|AUS. Retail sales MoM||Actual: -4.4% (0.4%)||Previous: 7.3%|
Support can be found at 0.6990 (2021 low) and 0.6970 (2022 low).
Resistance for the pair can be seen at 0.7090 (January 24 low) and 0.7170 (50 sma).
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