German data the next hurdle for the EUR
Our economists and market consensus are looking for a small contraction in German March industrial production after February’s 0.5% expansion. With French production numbers having surprised weak on Tuesday and ECB President Draghi having sent a clear message that the ECB is prepared to cut further if needed, the EUR could retreat a bit if today’s German print comes in on the soft side. But, the strong German industrial orders released yesterday has probably reduced the risks of a downside surprise on today’s release somewhat and we think risk-reward remains attractive for EUR longs heading into the data. The EUR has lost some interest rate support in May, but strong local equity and sovereign performance should more than fully offset this. We maintain a long EURUSD trade recommendation established at 1.30, targeting 1.34, with a stop at 1.2840.
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BNP Paribas