(MENAFN- DailyFX) EUR price, news and analysis: A weak economy could mean a longer wait for the European Central Bank to increase Eurozone interest rates. That suggests the next move in EURUSD could be downwards. Euro under downward pressure
Against the background of economic weakness in the Eurozone, speculation is growing that the ECB could wait until the fourth quarter of this year or even until 2020 before increasing its benchmark interest rates. The central bank's current guidance is that rates will be on hold 'through the summer of this year but the weakness of the Eurozone economy suggests that a rise in the third quarter of 2019 is becoming increasingly unlikely.
The meeting Thursday of the ECB's rate-setting Governing Council will end with it leaving all its monetary-policy settings unchanged but any acknowledgment that downside risks to the Eurozone economy have increased will likely hit the Euro , which has been weakening since hitting a high of 1.1570 on January 10.
EURUSD Price Chart, Daily Timeframe (August 14, 2018 January 23, 2019) Chart by IG (You can click on it for a larger image)
That has brought it closer to the support line of a rising channel that has contained the price since mid-November last year and a break below it would be a negative signal technically. Further weakness to the 2019 low close to 1.13, touched on January 2, would increase the downside potential and a fall through there would make the outlook more negative still.
Germany's ZEW research institute reported Tuesday that analysts and investors it had surveyed regarded the current economic situation in the country as the weakest since January 2015. There is also a risk that the current Brexit stalemate could have a knock-on effect on the Eurozone economy, as could the current slowdown of the global economy in general and China's in particular.
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