EUR/USD breaks below 1.1000 to print 2-day lows, focus remains on key data

• EUR/USD loses the grip and breaches the key 1.1000 mark.
• Germany GDP figures surprised to the downside in Q1.
• Germany flash CPI, US PCE next of note in the calendar.

Sellers remain in control of the sentiment surrounding the European currency and drag EUR/USD back below the 1.1000 mark at the end of the week.

EUR/USD loses momentum on weak German GDP

EUR/USD accelerates losses and breaks below the psychological 1.1000 support on Friday in response to discouraging figures from the advanced GDP Growth Rate in Germany during the January-March period.

On the latter, the German economy is expected to contract 0.1% YoY in Q1 and remain flat vs. the previous quarter. Adding to these poor results, the jobs report did not help either after the Unemployment Change rose more than estimated by 24K people amidst a steady jobless rate at 5.6%.

Later in the session, advanced inflation figures in Germany and the preliminary GDP Growth Rate in the broader Euroland will also take centre stage.

In the US, inflation figures measured by the PCE will be in the centre of the debate along with Personal Income, Personal Spending, Employment Cost and the final reading of April’s Michigan Consumer Sentiment.

What to look for around EUR

EUR/USD’s upside momentum loses further traction on the back of disheartening prints from the German calendar on Friday.

Meanwhile, price action around the single currency should continue to closely follow dollar dynamics, as well as the incipient Fed-ECB divergence when it comes to the banks’ intentions regarding the potential next moves in interest rates.

Moving forward, hawkish ECB-speak continue to favour further rate hikes, although this view appears in contrast to some loss of momentum in economic fundamentals in the region.

Key events in the euro area this week: Euro group Meeting, Germany labour market report/ Advanced Inflation Rate/Flash Q1 GDP Growth Rate, EMU Flash Q1 GDP Growth Rate (Friday).

Eminent issues on the back boiler: Continuation (or not) of the ECB hiking cycle. Impact of the Russia-Ukraine war on the growth prospects and inflation outlook in the region. Risks of inflation becoming entrenched.

EUR/USD levels to watch

So far, the pair is losing 0.41% at 1.0981 and faces the next support at 1.0909 (weekly low April 17) seconded by 1.0831 (monthly low April 10) and finally 1.0788 (monthly low April 3). On the flip side, the surpass of 1.1075 (2023 high April 14) would target 1.1100 (round level) en route to 1.1184 (weekly high March 21 2022).