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Fundamental Analysis of EUR/USD for April 25, 2019

EUR/USD has been quite non-volatile and impulsive amid the recent bearish pressure which pushed the pair below 1.1200. Now the pair is heading towards 1.10 support area. Yesterday, an IFO survey revealed a surprise deterioration in business sentiment in Germany and the eurozone. meanwhile, USD is taking advantage of EUR weakness.

The ECB mentioned in its last monthly economic bulletin that the instant impact of US car tariffs would be small for the European economy. This indicates that the monetary authorities aren't too anxious about the prospects of tariffs. The comments gave some help to the single currency. But the overall bearish pressure still persists as the other economic data was not seen to be positive. The euro area's real Gross Domestic Product rose by 0.2% in Q4 2018. Annual HICP inflation eased to 1.4% in March 2019, the annual growth rate of loans to non-financial corporations rebounded to 3.7% in February 2019. The slowdown in the eurozone's economy is pushing the EUR/USD pair down.

EUR/USD remains under pressure and continues to challenge the 1.12 area. French Flash Services PMI was better than expected at 50.5 while German Flash Manufacturing PMI became 44.5. Yesterday, an IFO survey added to the negative sentiment on EUR as Business climate index for Germany dropped to 99.2 from 99.6. The current assessment of Business climate index sank to 103.2 from 103.8 while business expectations weakened to 95.2 from 95.6. The Spanish Flash GDP will be published next week along with the Core CPI Flash Estimates. The market sentiment on EUR is expected to be bearish in the short term.

On the USD side, the amazing rise in new home sales amid lower mortgage rates suggests that the US housing markets could be on a better path than originally predicted. The core durable goods orders are expected to increase from -0.1% to 0.2%. Besides, flash GDP is predicted to be unchanged. The current sentiment on GDP is better than expected as FED has expressed confidence about the labor market and GDP to grow in Q2 of 2019. Under the current market conditions, EUR/USD is facing a key area of 1.2 where it might be more bearish if US GDP can beat the expectations.

USD is expected to set the tone in the pair if the forecasts of the economic reports come true. In case if the economic reports are worse-than-expected, the pair could respond with weakness and a volatility spike.

Now let us look at the technical view. The price broke below a key support area recently with a strong bearish daily close that suggests further bearish momentum in the coming days. The impulsive bearish pressure could push the price lower towards 1.1000-50 support area from where certain bullish intervention may occur. As the price remains below 1.1300 area with a daily close, the pair is goig to trade under bearish pressure.


The material has been provided by InstaForex Company -