Last week the euro fell from a five-week high against the dollar as fears of weakening inflation and a slowdown in corporate lending have raised questions about the momentum of economic expansion. The economic sentiment indicator in the ZE fell to 112.6 in March from 114.2 in February. The pessimistic results of economic sentiment coupled with data that the growth of lending and the supply of currency in the Euro Zone slowed led the pair to depreciate below 1.2400. Supporting the fall, there was also the US GDP in the fourth quarter of 2017, which was above expectations (2.9% vs 2.7%).
On a technical basis, Eur / Usd broke the downtrend since mid-February but ended up showing a huge vulnerability above 1.2400 and subsequently returning to the short-term downtrend. The pair has been consolidating between the retraction lines of fibonacci 0% and 38.2%. If the pair falls bellow the level 1.2240 – 1.2200, there may be a confirmation of a more defined short-term downtrend.