The European currency today corrected against the US dollar after news that the unemployment rate in Germany did not change in March this year, although the figure could be even worse than economists’ forecasts. Considering what negative fundamental statistics came out this week on the German economy, it is not surprising that traders reacted by taking profit on long positions gained after yesterday’s meeting of the Federal Reserve System. We must not forget that tomorrow is the last day of April, and how investors will behave after such a rapid rally in this meat is a big question. If we still manage to get closer to the 22nd figure, the demand for risky assets will continue at the beginning of next month. Any correction below 1.2110 could create problems for speculators’ short-term expectations.
If we have already hooked on the technical picture, then let’s talk about it briefly. The buyers of the euro coped with the main task today in the first half – keeping the support of 1.2110 under control. Now we can expect continued growth in the area of the highs of 1.2180 and 1.2240, but before that something needs to be done in the area of today’s high. I think that as the pair approaches this level, sellers will become more and more nervous, which ultimately will lead to the demolition of a number of stop orders and a large upward trend. If the pressure on the trading instrument returns, then, most likely, the bulls will again need to think about how to protect the support at 1.2110. A breakdown will quickly return pressure to the pair and push it to the 1.2055 low, opening a straight path to the 1.2000 area.
Coming back to the report, the unemployment rate in Germany remained unchanged in March at 4.5%. Thus, about 2 million people were in search of work and were unemployed in March this year, which is 5,000 more than in February. Compared to March 2020, the number of unemployed increased by 374,000 or 22.4%. The report also indicates that employment in March fell by 1.4%, or 628,000 people per year.
A Destatis report today indicated that import prices in Germany rose at the fastest pace in nearly a decade. However, the growth is mainly due to higher energy prices. Import prices rose 6.9% year-on-year in March, after rising 1.4% in February. The acceleration of inflation was caused by the rise in energy prices by 56.7%, but without taking this indicator into account, the inflation of import prices was only 3%.
Perhaps the most important report, which was emphasized today in the first half of the day, was the index of economic confidence in the eurozone. The sharp rise in the indicator allowed to stop the downward correction in the pair, which was observed during the European session. The European Commission said the economic confidence index rose to 110.3 points from 100.9 points in March. The estimate was significantly higher than the forecast of economists, who had expected the indicator at the level of 102.2 points. The polls say that many expect a stronger recovery in the eurozone economy in the second quarter of this year, thanks to the vaccination program, which is being carried out in the EU countries. Almost all sectors of the economy surveyed reported an improvement in sentiment. The industrial confidence index rose to 10.7 points from 2.1 points in March, while the service sector sentiment index was 2.1 points from -9.6 points in the previous month.
The British pound strengthened its position against the US dollar, but growth was limited again in the area of large resistance at 1.3970. A spokesman for the UK Prime Minister said in an interview today that more data is needed before the government allows fully vaccinated people to meet indoors. Claims that the UK still needs more restrictive measures to see if the vaccine is working to its fullest have also put the pressure back on the pound. The complete abolition of restrictive measures is planned only in the middle of this summer, when more than half of the people will receive the second dose of the vaccine. So far, only 64.5% of the UK population has received their first dose.
As for the technical picture of the pair GBPUSD, the breakout of the resistance 1.3970 did not take place. This range remains the main task of the GBPUSD buyers. If we manage to get higher, we can expect a continuation of the bullish trend towards the highs of 1.4020 and 1.4065. If not, then buyers will have to defend the support 1.3920, since a lot depends on this level. A breakout of this range will quickly bring pressure back to the pound, leading to lows at 1.3860 and 1.3800.