Germany is the export powerhouse of the European Union, the largest economy on the continent and the driving force behind EU surpluses as well as fiscal and political policies. Chancellor Merkel is approaching the end of her political career and her as well as her party, the CDU, have already suffered losses in regional elections. Her own election victory marked the worst showing for her party since World War II. With a slowing global economy and a leadership change during the next German elections, Merkel’s team as well as other officials are undecided on how to proceed.

Economic data out of the Eurozone released this morning showed economic confidence posted its 12th consecutive contraction in the month of December. This represented a decrease in every single month for 2018 and the worst such streak since the global financial crisis in 2008. The Eurozone Economic Sentiment Index, which includes confidence data from households as well as companies, dropped to a two-year low.

Last year at this time, the majority of forex traders and market professionals were talking about parity between the Euro and the US Dollar as the EURUSD dropped to as low as 1.03373 on an intra-day level. Price action had plenty of downside momentum and the phrase ‘the trend is you friend’ was thrown around. As with all trend, they do reverse and the Euro entered an explosive growth spurt. Twelve months later the EURUSD recorded an intra-day high of 1.25358.