The Euro is recovering a little bit. Overview for 17.05.2022

EURUSD is slowly moving away from the lows. However, the asset is still rather weak. 

The major currency pair managed to move away from the lows on Tuesday. The current quote for the instrument is 1.0477.

The European Commission worsened the Euro Area GDP expectations for 2022. The updated forecast implies 2.7% q/q against the February estimate of 4.0% q/q. In 2023, the indicator is now expected to gain 2.3% q/q against 2.7% q/q. The CPI might show 6.1% this year (previously 3.5%, and 2.7% in 2023 – both readings are higher than the ECB’s target level of 2.0%.

The report says that geopolitics aggravate the delivery interruptions issue. At the same time, there is a potential for a further energy price surge along with global uncertainty about future prospects. 

Even if the ECB revises its conservative stance and starts tightening the monetary policy as fast as the US Fed does, it won’t be able to make the prices won’t reach stability. There are too many outside impact factors and unknown data, which should be taken into consideration. 

There were no important statistics earlier in the week and market players were focused on technical signals. It will change today – the US is scheduled to release several significant reports, which may influence EURUSD and investors’ risk attitude. 

For example, the US Retail Sales for April, which is expected to show 1.0% m/m after being 0.5% m/m the month before. At a time of increasing inflation, it might be rather unusual. The Industrial Production might gain 0.4% m/m after adding 0.9% m/m in March. Both reports will have important details, such as new orders and capacity utilization. These details might provide the whole picture of what is going on in the US economy and help to understand whether the economy is really in trouble.