EUR/USD Moves Higher Despite Weak Economic Sentiment Report
- EUR/USD is moving higher despite new highs in the European natural gas markets.
- GBP/USD is also trying to reound as traders take some profits off the table after the recent move.
- It remains to be seen whether EUR/USD and GBP/USD rebounds will be sustainable as the EU and UK economies are under strong pressure due to energy crisis.
EUR/USD Rebounds After Pullback
EUR/USD is currently trying to rebound as traders react to the Euro Area ZEW Economic Sentiment Index report. The report indicated that Economic Sentiment declined from -51.1 in July to -54.9 in August, compared to analyst consensus of -57. In Germany, Economic Sentiment declined from -53.8 to -55.3.
The report was not as bad as expected, but it is clear that the European economy is in a bad shape. Today, European natural gas prices hit new highs as draught put pressure on power generation.
Interestingly, EUR/USD traders managed to ignore disappointing developments in energy markets. However, it remains to be seen whether EUR/USD will find enough catalysts for a sustainable rebound due to major problems in the European economy.
At this point, it looks that profit-taking is behind the current attempt to move closer to the 1.0200 level. Without sufficient catalysts, this attempt will be unsuccessful.
GBP/USD Enjoys Boost As U.S. Housing Reports Disappoint
GBP/USD is also trying to rebound after the recent pullback. Today, the UK released Claimant Count Change report for July, which indicated that the number of people claiming unemployment benefits declined by 10,500. Unemployment Rate remained unchanged at 3.8%.
In this U.S., traders had a chance to take a look at Building Permits and Housing Starts reports. The reports indicated that Building Permits declined by 1.3% month-over-month in July, compared to analyst forecast of -1.2%. Housing Starts decreased by 9.6%, while analysts expected that they would grow by 1%.
The disappointing Housing Starts report was somewhat offset by the better-than-expected Industrial Production report for July. The report showed that Industrial Production grew by 0.6%, compared to analyst consensus of 0.3%.
From a technical point of view, GBP/USD has recently managed to settle above 1.2050 and is moving towards the 1.2100 level, where it may face stronger resistance.
For a look at all of today’s economic events, check out our economic calendar.