EUR/USD is showing little movement at the start of the week. Currently, the pair is trading at 1.1241, up 0.06% on the day. On the release front, there are no major eurozone events. German industrial production posted a fourth straight decline. The reading of -0.8% missed the forecast of 0.5%. In the U.S., Core retail sales are expected to gain 0.4%, after a decline of 1.8% a month earlier. Retail sales is projected to improve to 0.0%, after dropping 1.2% in the previous release. On Tuesday, the U.S. releases CPI data.
The U.S. dollar was broadly lower on Friday, after a surprisingly low reading from nonfarm payrolls. The indicator showed that the economy eked out just 20 thousand jobs, much worse than the forecast of 180 thousand. On a brighter note, wage growth improved to 0.4%, above the estimate of 0.3%. The soft nonfarm payrolls reading pushed the euro slightly higher to end the week.
The euro is coming off a rough week, as EUR/USD lost 1.1 percent. The pair dropped sharply on Thursday, slipping to its lowest level since June 2017. This was in response to the ECB rate statement and comments from Mario Draghi, which were more dovish than expected. The ECB announced that it was extending its forward guidance on interest rate levels, saying that it would not raise rates before 2020. Although this should not have come as a surprise, the ECB had been on record until now as saying that rates could move higher in late 2019. In an acknowledgment to the slowdown in the eurozone, the ECB announced a new round of long-term loans to eurozone banks and slashed the 2019 GDP forecast for the bloc to 1.1%, down from 1.7% in the previous forecast. Mario Draghi reinforced the bank’s dovish stance in his press conference, saying that downside risk was pointed to the downside, although a recession was unlikely.
