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EUR/USD Sinks on German Economic Sentiment, General Risk Aversion

March 17, 2020 by

EUR/USD tumbled today as investors were scrambling for safety that the dollar can potentially offer. Meanwhile, the euro was dragged down by the extremely poor economic sentiment in Germany and the outlook of a recession in the German economy. (Event A on the chart.) An unexpected drop in US retail sales did not help the currency pair much. Other US economic reports were not that bad.

US retail sales dropped by 0.5% in February on a seasonally adjusted basis instead of rising by 0.2% as analysts had predicted. On a positive side, the January increase got an upward revision from 0.3% to 0.6%. (Event B on the chart.)

Industrial production and capacity utilization rose in February. Industrial production advanced by 0.6% after falling by 0.5% in January. Analysts were expecting a smaller increase of 0.4%. Capacity utilization increased from 76.6% to 77.0%, in line with forecasts. (Event C on the chart.)

Business inventories decreased by 0.1% in January, matching forecasts exactly. December reading got a positive revision from a decline of 0.1% to no change. (Event D on the chart.)

If you have any comments on the recent EUR/USD action, please reply using the form below.

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