EURUSD Drops to Fresh Cycle Lows
25 April 2022
The USD continued to strengthen on Monday, pushing the EURUSD pair 0.5% lower to trade at 1.075, the level last seen in March 2020.
The German IFO Business Climate Index unexpectedly climbed to 91.8, compared to 90.8 last month and 89.1 consensus expectations.
Meanwhile, the Current Economic Assessment increased to 97.2 points in the reported month, up from 97.1 and 95.8 points expected in March.
The IFO Expectations Index, which measures firms' expectations for the next six months, increased to 86.7 in April from 84.9 the previous month, surprising the market with a score of 83.5.
On the other hand, in a recent note published Monday, Morgan Stanley analysts scaled down their projections for Eurozone GDP growth this year and next.
“It had now lowered its 2022-euro area GDP forecast to 2.7% from 3% previously and shaved one percentage point off its 2023 growth forecasts to 1.3%.”
As per Reuters, Germany's government boosted its inflation projection for 2022 to 6.1 percent in its spring forecast, up from 3.3 percent in January, citing a report acquired from official sources.
Technically speaking, the next target for bears should be at the post-COVID lows near the 1.0620 zone. Should the euro drop below that level, we might see the 1.05 threshold again, for the first time since 2016/2017.
Alternatively, the euro must climb above 1.08 to cancel the current bearish pressure, with the next level to watch afterward in the 1.10 region.