Euro Outlook bearish, EURUSD may fall on BCE. Brexit Deadline Near

Euro Price Basic forecasts: bear

• Consolidation of the euro on EU statistical data, progress of trade talks between the United States and China
• EUR / USD could fall on the ECB and disappointing data from the German CPI
• The business outlook for the euro is also clouded by US-China trade negotiations, Brexit

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the euro spent most of last week consolidating, but its trajectory this year so far has been cautiously reduced with prolonged episodes of side transactions. Do not get me wrong, these last 5 days remind us of the immense pressure of the single currency. A series of disappointing European economic data showed that the ECB's caution in March was not in vain.

It started with softer than expected CPI of the euro area in March, following a disinflationary trajectory since October. Later in the week, German factory orders contracted unexpectedly by most since 2009. In the meantime, economic growth forecasts for 2019 in the central of Europe aalthoughin Italy have been revised downwards.

For more updates on EUR / USD, check out our Euro landing page!

The chart below shows the Bloomberg index weighted by euro correlation superimposed on German the yields on term government bonds and the Citigroup Eurozone Economic Surprise Index. The latter shows that, since mid-March, economic data in the euro area have tended to underperform more and more compared to expectations. Note that the 3 elements of the graph have both dropped in parallel.

Week of the coming euro

EUR / USD could be at risk of losses on the next European Central Bank rate decision. In the previous statement of March, the ECB pushed back expectations of rate hikes as it reduced its growth forecasts. Since then, and as noted above, the weakness of regional growth has been largely the case. President Mario Draghi continue to reiterate the need for caution at its press conference.

Want to know where l & # 39; euro maybe go to the second quarter? Read our recently published Basic and technical forecasts EUR / USD Q2 2019!

In the minutes of the March meeting, increased uncertainty was a concern, referring to high trade tensions in the largest economies in the world. China is one of Europe's largest external trading partners and its economy is slowing, as is the EU. Last week, Chinese President Xi Jinping, accompanied by Deputy Prime Minister Liu He, suggested that considerable progress had been made in trade negotiations with the United States.

Yet the euro has not been able to find much support, even if the stock has done, which is a bit worrisome. As the negotiations near their end, the persistent problems that persist remain more and more present. The most notable are those on intellectual property rights. Donald Trump's first economic adviser, Larry Kudlowsaid Friday that talks with China were not over yet, but progress was possible.

In addition to ECB updates and trade discussions, keep a close eye on regional data. German CPI and wholesale inflation statistics will cross the wires. Industrial production of the euro area is also due. If the trend of disappointing results continues, the euro could extend its losses according to increasingly divergent monetary policy expectations.

Brexit remains a joker with the unconditional extension of the withdrawal deadline as of April 12th. At the end of last week, the President of the European Council Donald Tusk offered the UK a 12-month divorce period. Meanwhile, Premier Theresa May has requested an extension until June 30th. With this in mind, all eyes will be on the Brexit summit organized on April 10 with EU leaders.th for the next step forward.

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— Written by Daniel Dubrovsky, Junior Forex Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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