Today’s trading session in Europe began with an unpleasant surprise. Data on German economic growth has doubted the status of the country as the main eurozone economy. What is more, estimates provided by German economists turned out to be less accurate than everyone thought.
Thus, Germany has officially slipped into recession. The final data on the German GDP for the first quarter turned out to be significantly lower than the initial estimate. Economists reported a decline of 0.3% instead of stagnation, which is a zero rise. As a rule, a country announces a technical recession if GDP falls for two quarters in a row. This is what happened in Germany. In other words, the eurozone largest economy slid into recession amid high inflation and key interest rate.
Against the backdrop, demand for the euro slumped, whereas the US dollar has become even more overbought. Today, the greenback is unlikely to show a decline. Judging by the recent two weeks, to spur even an insignificant correctional movement, the pair needs positive macroeconomic data, that is not observed at the moment.
Apart from the earlier mentioned events, today, the US will disclose its unemployment claims figures. Thus, the number of initial claims may increase by 3 thousand, while the number of continuing claims may drop by 9 thousand. The overall number of claims may decline by 6 thousand.
Moreover, the decline will be mostly triggered by a smaller number of continuing claims, which is considered more important than initial claims. It means that the US dollar is unlikely to lose value. However, it will hardly rise significantly as its upward potential is limited by overbought conditions.

Ahead of the publication of the US reports, we see that the euro continues falling against the US dollar. Since the beginning of the month, the euro has lost about 3%, which is quite a lot and could be considered an inertial movement.
At the moment, the technical signal of the euro’s oversold conditions could be seen in the short-term period. However, speculators are ignoring the signal, which is leading to an inertial downward movement. In any case, traders will fix short orders, which will trigger a long-awaited technical rebound.

Meanwhile, the pound sterling also continued losing value against the US dollar. The pound/dollar pair dropped below the support level of 1.2350. This means that traders’ sentiment remains bearish despite technical signals of oversold conditions in the short-term and intraday periods.
If the price settles below 1.2350, it is likely to slide deeper. Thus, the current correction from the peak of the mid-term uptrend may turn into a long-lasting one.
Nevertheless, the mid-term trend remains bullish.
Thus, the upward scenario suggests a gradual recovery of the pair. The predictions will become true if the downward cycle slackens and the price consolidates above 1.2350. Then, long positions on the British pound may show a gradual rise.


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00:00 INTRO
00:24 GERMANY’S QUARTERLY GDP GROWTH RATE
01:04 QUOTES
01:28 US
02:10 EUR/USD
02:48 GBP/USD