Euro steadies near weekly highs following bright Eurozone growth numbers | FXStreet

The Euro (EUR) is retracing previous losses against the US Dollar (USD) on Wednesday, fuelled by upbeat Eurozone Gross Domestic Product (GDP) and economic confidence data. The EUR/USD has returned to levels just above 1.1450 from a daily low at 1.1437, and is approaching the top of the last six weeks’ trading range, in the 1.1480 area.

Preliminary data from Eurostat released earlier in the day revealed that the Eurozone Economy grew 0.4% in the second quarter, largely reversing the first quarter’s 0.2% contraction and beating expectations of a 0.2% growth. Likewise, the year-on-year (YoY) growth surged to 1% from 0.3% in the previous quarter, twice as much as the 0.5% growth anticipated by the market consensus.

At the same time, the European Commission confirmed a mild improvement in July’s Consumer Confidence Survey, which rose to -15.9 from June’s -17.7, while the economic and industrial sentiment indicators improved beyond expectations. On the negative side, the Eurozone’s Unemployment Rate ticked up to 6.3% in June against expectations of a steady 6.2% rate.

Before that, the German Federal Statistics Office revealed that German GDP grew at a 0.2% pace in the second quarter of the year, also according to preliminary figures. This is a more moderate growth than the 0.3% seen in the first quarter, but stronger than the 0.1% expected by the market. Year-on-year, economic growth accelerated to 0.9% from 0.4% in the first quarter, also above the 0.6% market consensus.

Geopolitical tensions weigh on the Euro

The Euro, however, is pulling back on Wednesday, weighed by moderate risk aversion as the US and Iran resumed hostilities after a three-day truce, crushing investors’ hopes of a negotiated outcome and sending Oil prices higher.

Geopolitical tensions have provided some support to the Dollar, to retrace some of the ground lost on Wednesday, following the Federal Open Market Committee’s (FOMC) meeting. The Fed left interest rates unchanged, amid a split committee, and Chairman Kevin Warsh refused to give any forward guidance, raising concerns that the central bank might be failing to do its job and reviving doubts about the central bank’s independence.