The EUR/USD retreated on Friday as the US bond yields rose and after the weak German exports numbers. Nonetheless, the pair is on track for its first weekly gain in four weeks. It is trading at 1.1890, which is slightly below the weekly high of 1.1927.
Germany trade surplus narrows
The German trade surplus narrowed in February as the country implemented a lockdown to curb the pandemic. According to the country’s statistics agency, exports rose by 0.9% after rising by 1.6% in January. This increase was slightly below the median estimate of 1.0%. Precisely, the country exported goods worth more than 107.8 billion euros.
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In the same period, imports rose as most people used foreign-made goods. Imports rose by 3.6% in February to 89.7 billion. This increase was better than the 3.6% decline seen in January and the expected rebound of 2.4%. As a result, the German trade surplus narrowed from 21.5 billion in January to 19.1 billion.
Still, analysts expect that exports will rebound later this year as lockdowns end. Indeed, the auto sector has led the recovery as more people abroad buy cars.
The EUR/USD also declined after the weak French industrial numbers. The country’s industrial production declined by 4.2% in February after rising by 3.2% in January. In Spain, production declined by 2.1%. In general, analysts expect that the European economy will have a slower recovery because of the slow rollout of the vaccine.
The EUR/USD retreated because of the stronger US bond yields. The 10-year yield has risen to 1.66% while the 30-year yield has risen to 2.33%. Stronger yields in the US is a sign that forex investors expect the economy to rebound faster.
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EUR/USD technical outlook
On the daily chart, we see that the EUR/USD price has retreated at a key point. It has moved slightly below the upper side of the descending channel. In technical analysis, a price can either rise above such resistance or retreat as bears target the lower side of the channel. Also, it has moved below the 23.6% Fibonacci retracement level and is below the Ichimoku cloud. Therefore, the pair will likely retreat as bears target the lower side of the channel and the 38.2% retracement at 1.1690.
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