The euro is dropping to fresh lows for the day against the dollar, down 0.4% to 1.0730 currently. The pair is now looking poised to test the 100-hour moving average (red line) at 1.0723. That is a level that has seen the upside run over the past two weeks sustain, so a drop below that will offer a bit of room for sellers to work with in wrestling back some momentum.
The revision lower in France Q1 GDP saw the economy contract, with household consumption being a significant drag. The accompanying figures for April on consumer spending isn’t encouraging, which shows spending down 0.4% on the month as compared to expectations of a 0.8% increase.
The worries there are compounded by the fact that inflation for May came in higher than expected, with the headline reading jumping to 5.2% year-on-year – beating estimates of 5.0% and April’s 4.8% reading.
The euro has had a decent run in the past two weeks, recovering as it gathers some breathing room against the dollar. But as inflation worries start to seep in again and bond yields are jumping, that could see markets switch away from the single currency as recession/stagflation risks begin to mount.