Eurozone’s 0.4% GDP Upside Fails to Lift EUR/USD Above 1.1400

Eurozone Growth Surpasses Expectations as EUR/USD Struggles Near 1.1400

Economic Momentum Rebounds in the Eurozone

Eurostat’s flash estimate revealed that the Euro area economy expanded by 0.4% in Q1 2025, doubling the 0.2% gain seen in Q4 2024 and outpacing consensus forecasts of 0.2%. Seasonally-adjusted annual growth held steady at 1.2%, matching the previous quarter’s pace. Ireland led the charge with a remarkable 3.2% expansion, followed by Spain and Lithuania at 0.6%, Czechia at 0.5%, and Belgium at 0.4%. Germany, long mired in contraction, exited recession with a 0.2% uptick, while France eked out a 0.1% gain—below the 0.2% analysts had penciled in. Hungary alone recorded a 0.2% slide.

EUR/USD Consolidates Below 1.1400 Despite Strong Data

EUR/USD dipped 0.17% on Wednesday, trading in a narrow band between 1.1360 and 1.1400 as traders weighed the better-than-expected Eurozone figures against persistent stagflation fears. The single currency’s inability to mount a sustained rally underlines skepticism that a one-off GDP beat can overcome looming pressures from high borrowing costs and energy-driven inflation.

US Data and Trade Sentiment Drive Dollar Resilience

In the United States, March’s goods trade deficit widened to $162.0 billion from $147.8 billion in February—far above the $145 billion estimate—prompting Pantheon Macro to slash its Q1 GDP forecast from +0.5% to –1.0%. Consumer confidence slid to 86.0 in April, near pandemic-era lows, while 12-month inflation expectations rose to 7.0%, the highest since November 2022. Yet the dollar shrugged off weak US data as equity markets rallied on hopes of tariff relief, reversing many “sell-America” positions and lending the greenback a mild bid.

Technical Outlook: Waiting for a Break of Support or Resistance

On the daily chart, EUR/USD sits at a critical juncture. Immediate support begins at 1.1300, followed by the March swing low at 1.1214. A breach below 1.1214 would open the door to 1.1095, the September 2024 pivot. On the upside, resistance clusters at 1.1425 and then the 1.1500 round number, with the April peak at 1.1573 the barrier to any sustained euro-charged rally. The 14-day RSI has softened from overbought levels near 65 to around 52, signaling neutral momentum.

Positioning Verdict: Neutral-to-Bearish Bias

Despite the Eurozone’s surprise GDP upside, EUR/USD remains capped by both technical hurdles and the dollar’s countertrend strength amid easing trade-war fears. With key US releases—first-quarter GDP and core PCE later today and Friday’s payrolls—likely to sway Fed rate-cut timing, the pair looks destined for a period of consolidation. Unless data dramatically surprises, selling rallies toward 1.1425–1.1500 offers the more compelling risk/reward, while bids near 1.1300 carry less conviction. On balance, I adopt a neutral-to-bearish stance on EUR/USD, eyeing a tactical sell in the 1.1425–1.1500 region and scaling back positions under 1.1300.

That's TradingNEWS