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Euro weakens due to contraction of German economy

In the European session on Friday, the euro weakened against major currencies amid the accelerated contraction of the German economy in the first quarter due to the coronavirus pandemic.

According to the Federal Statistical Service, GDP fell 1.7% sequentially after rising 0.5% in Q4 2020. This is more than the forecast of -1.5%.

In the first quarter, unadjusted GDP declined by 3.3% per year faster than in the previous quarter (by 2.3%). A decline of 3.6% y / y was predicted.

Compared to Q4 2019, GDP in Q1 2021 was 4.9% lower.

The euro was further weighted by the dollar’s strength as strong economic data strengthened hopes for a faster economic recovery.

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The euro fell to a 2-day low of 1.2091 against the US dollar and touched 1.0987 against the franc (the lowest level since April 13). The next support levels against the US dollar and the franc are likely to be at 1.18 and 1.07, respectively.

The euro fell to 131.62 against the yen from Thursday’s close at 132.02. Support is expected around 129.00.

Data from the Ministry of Economy, Trade and Industry showed that industrial production in Japan rose by 2.2% on a seasonally adjusted basis in March. This beat the forecast for a 2.0% fall after falling 1.3% in February.

The euro fell against the Canadian dollar to its lowest level since April 6 (1.4839) and may receive support around 1.44.

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The European currency fell to 1.5561 against the Australian dollar from a previous high of 1.5608. Against the New Zealand dollar, the euro traded down to 1.6712. The next support is seen around 1.49 against the Australian dollar and 1.62 against the New Zealand dollar.

The euro fell to 0.8684 against the pound after hitting a 2-day high of 0.8703 at 3:15 am ET. If the decline continues, the next support level is likely to be at 0.84.

According to the National Building Society, in April after the extension of the tax break, house prices in the UK grew at the fastest pace since 2004 – at 2.1% mom, which is a record monthly growth since February 2004. It was forecast to rise 0.5% after a reported 0.3% fall in March.

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The American session will present data on Canada’s GDP in February, data on the level of personal income and spending in the United States in March and the final consumer sentiment index of the University of Michigan for April.

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