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Forex: EUR/USD plunges on wider recession in Eurozone

The EUR/USD is plunging below 1.3375/80, driven by the release of the flash EMU GDP Q4 that shows worse than expected data. The pair is currently down to 1.3336.

Recession in the Eurozone has gone from -0.6% to -0.9% in Q4 (YoY), instead of the expected -0.7%, according to the preliminary report, pointing also to the quarterly contraction of -0.6% (consensus of -0.4%).

In Germany, economic growth might have eased from 0.4% to 0.1% (YoY), below 0.2% consensus, with a quarterly recession of -0.6% (consensus of -0.5%). The quarterly recession in France was of -0.3%. The Italian figure came in at -0.9% (QoQ), below -0.6% consensus, widening the annualized recession from -2.4% to -2.7%.

Just earlier, the ECB warned that the stronger Euro may pull inflation below the central bank's target. Its upside risks come from higher administered prices and indirect taxes, as well as higher oil prices, while and downside risks are due to weaker economic activity and, more recently, the appreciation of the Euro exchange rate. The ECB expects economic recovery to start later this year.

UBS analysts are bullish: "With MACD above its zero line, the risk is for end of the correction", wrote analysts Gareth Berry and Geoffrey Yu, pointing to resistance at 1.3564 ahead of 1.3711, while support is at 1.3325 ahead of 1.3270.

Greece Unemployment Rate (MoM): 27% in Nov from 26.6% in Oct

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