German ZEW investor confidence rose to 12.8 from 10.4 in the previous month. This was a sign that the number of those optimistic about the economic outlook continues to rise. The current conditions indicator improved to 77.3 from 76.4. Further signs then that the German and overall Eurozone recoveries remain on track. The breakdown showed that short term interest rate expectations for the Eurozone eased, as did long rate expectations. Additionally, Eurozone industrial production rose 0.9% m/m in January, after falling -1.2% m/m in the previous month. The annual rate fell back to 0.6% y/y from 2.5% y/y. Numbers have been volatile, and the three months’ trend rate remains unchanged at 0.9%, unchanged from December and November and with confidence indicators continuing to improve, the data are still consistent with ongoing economic improvements ahead.
The dollar was bid as markets jostle for position ahead of the FOMC announcement tomorrow, where the risk is that a fully expected 25 bp rate hike is accompanied with hawkish guidance. EURUSD is softer amid a firmer dollar, earlier carving out a two-day low at 1.0632, unaffected by the final release of German CPI data for February being confirmed at 2.2% y/y and a rise in German ZEW data. The 1 hour EURUSD chart remains bearish, since yesterday with RSI is sloping lower at 36.7, and MACD is in negative territory. In 4-hour chart, pair broke the 20-period moving average. Parabolic SAR in both 1 hour and 4-hour charts indicates further weakness by pointing downwards, since early today.
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