Technical Bias: Slightly Bullish
- EURUSD climbs more than 100 pips to 1.1202, as US dollar weakens.
- US President Obama argues that a stronger USD could be a problem for the economy.
- German trade surplus, industrial production rise in April.
The EURUSD rebounded sharply on Monday, as the dollar weakened across the board following comments by US President Barack Obama about the problems posed by a stronger currency.
The EURUSD climbed 1 percent – more than 100 pips – to 1.1202. The pair had previously climbed to an intraday high of 1.1220 after bottoming out in the mid-1.10s on Friday. The next technical hurdle for the EURUSD is 1.1281, the high from June 5. On the downside, initial support is likely found at 1.1085, the daily low.
Dollar Index Weakens
The US dollar index – a trade-weighted average of the dollar against six competitor currencies – declined 0.5 percent to 95.80. The dollar reacted negatively to comments made by US President Barrack Obama, who argued that a stronger national currency could pose a threat to the economic recovery. A strong dollar weighed on exports in the first quarter, resulting in a mild contraction in gross domestic product. US GDP declined 0.7 percent annually in the first quarter, revised estimates showed.
Strong German Data
Germany’s trade surplus widened in April, offering yet another sign that Europe’s largest economy was turning a corner. Germany posted a trade surplus of €22.3 billion in April, compared with €19.4 billion in March, the Federal Statistics Office reported on Monday.
Exports rose 1.9 percent in April while imports declined 1.3 percent, official data showed.
Separately, industrial production rebounded sharply in April, climbing 0.9 percent. Compared to April 2014, industrial production was up 1.4 percent.
Elusive Greece Deal Weighs on Markets
European stocks were on edge at the start of the week, as Greece and its international creditors remained far apart on securing a new bailout agreement.
The creditors tabled their “final” offer to the Greek government last week in an attempt to lift the impasse that would unlock future bailout aid. Greek Prime Minister Alexis Tsipras called the creditors’ conditions “irrational” on Friday, despite acknowledging that a deal was closer than ever.
Athens withheld a €310 million payment to the International Monetary Fund that was due on Friday, having decided to bundle its repayments this month into one payment at the end of June.