EUR/USD back in the low 1.1100's as Eurozone fundamentals kick in again
Along with the calming of risk sentiment, the return to fundamentals has seen weakness return to the EUR, with the German data this weak reminding traders that the single currency will face a tough task in its recovery while the Eurozone continues to struggle in the current economic climate.
Yesterday saw another sharp fall in German factory orders to the tune of 1.3% over November, and this morning, the trade figures saw the balance over the same period contracting from Eur21.9bln to Eur18.3bln, though industrial production was better at 1.1% vs 0.7%. Even so, we need to see a material turnaround in the regional economy and until then, the market will continue to put a cap on any EUR gains, which managed to reach into the mid 1.1200's due to heavy USD selling at the end of last year.
We are now back to more familiar levels, but a sustained break below 1.1100 will be needed in order to suggest there is conviction in testing the range that seems to be forming around 1.1000-1.1200 limits.
US data will also naturally play its part, and just as USD weakness had an exaggerated move in EUR/USD, the same goes for when the mood changes and the greenback is back in favour again