Here is the EURUSD fundamental analysis for 16th October 2019 after the fear of recession is haunting the European market, especially Germany.
October 16, 2019, | AtoZ Markets – The fear of Recession is haunting Europe again, especially in Germany. The rest of the Eurozone could follow suit. The statistics are increasing pressure on the Fed and ECB to sustain its easing policy, as it describes weakness in the areas to which these central banks pay the most attention. Eurozone inflation recently decreased to 0.9%, which is about half the ECB expectation, and weakness of business sentiment indices in Germany indicates that this decline may sustain further in the coming days. It is also important to look after the return of oil to $57 for Brent, which is currently at the 3-month lows area, which can impact the producer prices in the future.
EURUSD Fundamental Analysis
2008’s global financial and the Euro crises still fresh on everyone’s minds, which currently adds to a technical recession is by no means a crisis, and the question is whether the next Recession would be so bad for the Eurozone or not.
In this situation, the Eurozone desperately needs a review of its fiscal policies. A very prudent stance towards fiscal spending has become mainstream in Northern Europe at a time when monetary policy has lost its punch. Fiscal policies were at the heart of the euro crisis and could again be at the center of the next one but in a different way.
The German ZEW Economic sentiment has slightly decreased from -22.5 to -22.8 but remains above the expectation of -27.0. However, the statement of the German President will point further signs for the EU economy today.
The EUR/US dollar price has recently had the news of progress in U.S.-China trade negotiations, which included a new wave of tariff escalation sent the markets down. A new tariff war can be observed in the future as raising concerns about a possible European response may impact the overall situation. The tariff announcement was published in the worst period as it is under pressure from weak economic data from the US and Europe. Till now, US consumer spending has been quite positive, though a recent decline in consumer confidence has raised concerns recession in the future.
On the other hand, US consumers may feel tempted to rein in their spending ahead of Halloween and Thanksgiving. This year only two months have been negative, which suggests that it could lead to a bit of a slowdown.
The retail sales are expected to decrease from 0.4% to 0.3% while the core retail sales are expected to increase from 0.0% to 0.2%. The Philly Fed Manufacturing index is also pending this week which is expected to decrease from 12.0 to 7.3.
As per current observation, the Euro/US Dollar price is expected to show volatility this week due to the geopolitical uncertainties. Besides this, a wait and see approach is needed until the economic data release to confirm the direction.
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