The Euro Underpinned by Stellar Eurozone Growth Data

Eurozone economic growth data released on Wednesday, August 16 confirms the region continues to power ahead.

According to Eurostat, the annualised rate of growth stands at 2.2%, better than the 2.1% forecast by economists.

Quarterly growth stands at 0.6%.

The strong data confirms that the economy will continue to be the underpinning of the Euro's impressive rally which might ensure it rises through the remainder of 2017.

Following the data's release, the data the Euro index - which is a measure of overall Euro performance - is at 93.89, unchanged having been notably lower earlier in the day.

The Euro to Dollar rate is at 1.1736 having come down from a high of 1.1838 earlier in the week. The Euro to Pound Sterling exchange rate is at 0.9100 and remains constructive.

“Strong economic performances from Germany, France and Spain have contributed to the eurozone’s GDP being exactly where ECB president Mario Draghi would like it," says Dennis de Jong at UFX.com. “Draghi has made it clear that he will refuse to budge on interest rates for the foreseeable future – a policy that appears to be working well."

The Dutch economy grew at an extraordinary pace of 1.5% on a quarterly basis, a rate more commonly seen in booming developing economies.

"Given the incredible Dutch GDP growth and continued strength in Germany, the push for an end to QE in northern economies will become even louder as some key events are coming up. With inflation one of the few indicators that have not recovered to pre-crisis rates, the ECB will continue to be very cautious in its communication about the possible endings of QE," says Bert Colijn at ING.

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Euro Bullis vs Sterling, Vulnerable vs Dollar

The data comes at a time when downside pressures on the Euro are starting to build, particularly against the US Dollar.
“The Dollar recovery of the past couple of days has pulled EUR/USD marginally lower but the market still appears reluctant to make a decisive move below the old key breakout at $1.1711,” notes Richard Perry at Hantec Markets.
There have now been three slight intraday breaches of this support in the past week and none have resulted in a closing breach as the buyers have supported.
“However the corrective momentum continues to mount, with the RSI falling below 60, whilst both the RSI and Stochastics are falling at seven week lows,” says Perry.
This all suggests to the analyst that $1.1711 will remain under pressure and a breach would open $1.1614, another key long term breakout, whilst the support of the four month uptrend comes in at $1.1550 today.
Meanwhile, the Euro’s advance against Sterling appear to be ongoing with the 78.6% Fibonacci retracement at 0.9170 remaining in sight.
“The currency pair will stay immediately bid while it remains above the 0.9050 near term uptrend line. Below it lies the four month support line at 0.8909. The up move remains intact above here,” says Karen Jones, an analyst with Commerzbank.