The group of German economic experts sees the country’s economy contracting 5.1% this year
After a sharp sell-off seen yesterday, EURUSD regained a bullish bias but still struggled to see a more sustained momentum after failed attempts to make a decisive break above the 1.19 handle at the start of the week. On Tuesday, the pair was in the green before the pressure reemerged in recent trading. After climbing to 1.1840, the common currency retreated and was flirting with the 1.18 figure as of writing.
In part, the renewed pressure was due to the reports that the Group of German economic experts sees the country’s economy contracting 5.1% this year. The estimate reminded investors about the lingering economic risks from the ongoing pandemic and thus capped the already fragile demand for the common currency.
In other news, the November ZEW survey showed that the current situation index in Germany came in at -64.3 versus -63.5 expected and -59.5 in the previous month. In the Eurozone, the expectation index arrived at 32.8 versus 52.3 in September. Still, weaker-than-expected data failed to add to the pressure surrounding the common currency, as the pair continued to oscillate around the 1.18 mentioned level following the release.
In the short term, the outlook for a recovery in the EURUSD pair hinges on the general risk sentiment in the global financial markets. Despite the upbeat tone dominates at the moment, there are still too many uncertainties globally, suggesting a risk-off tone could reemerge at any point.
Elsewhere, the EURGBP cross plunged to over two-month lows around 0.89 in recent trading as the sterling was supported by renewed hopes for a last-minute Brexit deal while fresh selling pressure around the euro added to the bearish pressure. As a result, the pair dipped below the 200-DMA for the first time since May, which is a strong bearish signal in the short term.