The euro is calm at the start of the trading week. In the North American session, EUR/USD is trading at 1.0830, down 0.07%.
German industrial production rises 2.1%
Is the German economy coming out of a downswing? The week started on a positive note as industrial production jumped 2.1% y/y in February, up from a revised 1.3% gain in January and crushing the market estimate of 0.3%. This was the strongest expansion since January 2023 and a second straight expansion after eight straight declines. The strong industrial production release comes on the heels of Friday’s factory orders, which rebounded in February with a 0.2% m/m gain after sliding 11.4% in January.
The improvement in these readings has raised hopes that Germany’s manufacturing sector has turned a corner and will show improvement in the first quarter which would help boost a struggling economy. The economy contracted 0.3% in Q4 2023 and another decline in the first quarter would indicate a technical recession.
US nonfarm payrolls much stronger than expected
US nonfarm payrolls surged to 303,000 in March, up from a revised 270,000 in February and blowing past the market estimate of 200,000. The unemployment rate dipped lower to 3.8%, down from 3.9% and below the market estimate of 3.9%. Wage growth matched expectations at 4.1%, down from 4.3%.
The strong employment numbers are a sign of a robust US economy and that could mean that the Fed will push back a rate cut. The markets have lowered expectations for a rate cut in June or July due to the US employment report and a cut isn’t considered likely until September. The Fed is widely expected to hold rates at the May 1st meeting.
EUR/USD Technical
- EUR/USD tested support at 1.0826 earlier. Below, there is support at 1.0803
- 1.0859 and 1.0882 are the next resistance lines
