Euro Exchange Rates Pressured as German Eco-Stats Provide Downside Shock, EUR Lower vs Dollar But Strong Gains Seen vs British Pound

Momentum is now firmly pitted against the EUR, and we would expect further declines to continue on the basis that negative trend momentum is becoming entrenched. However, watch out for the continuation of the recovery vs the British pound.

Today's key euro exchange rates look as follows:

• The euro to dollar exchange rate (EUR/USD) is 0.06 pct in the blue having reached 1.3373.
• The euro to pound exchange rate (EUR/GBP) is 0.09 pct higher at 0.8017. Note that we have seen a strong relief rally in this pair over the course of the mid-week session as UK interest rate expectations are pushed back.
• The euro to Australian dollar (EUR/AUD) is unchanged at 1.4343.
• The euro to NZ dollar (EUR/NZD) is 0.11 pct higher at 1.5759.

Be aware that these are mid-market quotes and they will attract a discretionary spread from your bank. Hence the rate you see is not the rate you get.

However, an independent FX provider will seek to undercut your bank's offer, thereby delivering up to 5% more currency in some instances. Find out more.

German Economic Deterioration Keeps the Euro Under Pressure

The key problem for the euro at the present time is, understandably, the performance of the Eurozone economy.

The Ukrainian/Russian conflict is an understandable negative as it presents a great deal of uncertainty on future growth in Europe.

But, perhaps the biggest worry is the recent under-performance in the German economy.

Thursday saw the release of GDP data, Germany was expected to stagnate with a zero reading in Q2.

"Instead, it contracted 0.2 percent while Q1 got revised slightly lower to 0.7 percent. Both France and the euro zone registered zero growth which was also weaker than expected," says Joe Manimbo at Western Union.

Carl Hasty at Smart Currency Business says, "German data has consistently had a strong bearing on euro performance given the nation’s importance in the pursuit of a sustainable recovery in the eighteen-nation bloc and today’s Economic Sentiment data could cause sharp rate movements in the short term."

The German economy disappointed earlier in the week when confidence data underperformed, sending the Eurozone currency lower.

• ZEW Survey - Economic Sentiment (Aug) came in at 8.6, well below the expected reading of 18.2.
• ZEW Survey - Current Situation (Aug) came in at 44.3, forecasters had pencilled in 55.5.

These figures are derived from a survey of key investors and analysts in Germany and have come out at their lowest point since 2012.

"If you are looking to buy or sell euros, we suggest contacting your trader now for live rates, news and currency-purchasing strategies," says Hasty.

Russia concerns hits the German economy

Germany's economic momentum slowdown is now being squarley pinned on geo-political tensions with the German Economics Ministry saying the crises in Ukraine and the Middle East are putting a brake on growth in industrial output and exports.

The "very hesitant" recovery elsewhere in the Eurozone is also said to be weighing.

"The uncertainty should currently weigh more heavily than the direct effects of the imposed sanctions measures," the ministry said.

The ministry has warned for several months that the growth would slow in the euro zone's biggest economy in the second quarter after the winter's unexpectedly mild weather contributed to strong gross domestic product growth of 0.8% in the first three months of the year.

Euro's technical outlook: More losses ahead?

The euro to dollar exchange rate (EUR/USD) is currently quoted as being 0.32 pct in the red at 1.3341.

Swissquote Research note that the euro dollar rate is looking week and the downtrend, in place since May 2014, is likely to persist:

"EURUSD EUR/USD continues to hold at the lows. The proximity of the key support at 1.3296, a short-term rebound is likely.

"Resistances can be found at 1.3444 and 1.3503 (05/06/2014 low). An hourly support stands at 1.3333 (06/08/2014 low).

"In the longer term, EUR/USD is in a succession of lower highs and lower lows since May 2014. The downside risk is given by 1.3210 (second leg lower after the rebound from 1.3503 to 1.3700). A strong support stands at 1.3296 (07/11/2013 low). A key resistance lies at 1.3549 (21/07/2014 high)."