THE TAKEAWAY: German unemployment unexpectedly rises by 7 thousand -> Bundesbank expects a recovery over the rest of the year -> Euro declines against the US Dollar

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A surprise rise in German unemployment in August was met with little Euro reaction in Forex trading.

Unemployment rose by seven thousand for the month, worse than expectations for unemployment to drop off by 5 thousand and the reported 7 thousand person decline in job searchers in July. Meanwhile, the unemployment rate remained at 6.8% in August, as expected. The unemployment rate has not declined below 6.8% since June of 2012. The adjusted jobless total now sits at 2.943 million people.

The German economy is the Euro-zone’s biggest, and economic growth was reported at 0.7% in Q2, following unchanged GDP in Q1. However, the Bundesbank cut the annual growth forecast for 2013 in June to 0.3%, despite predicting a gradual recovery for the rest of the year.

The Euro did not significantly react to the German unemployment release, but EUR/USD fell nearly 100 pips over the European session. US Dollar strength seems to have been a strong driver in Forex markets over the session. A broken downward trend line from February may now provide support around 1.3222, and resistance may come in by a broken upward trend line from July, currently sitting at 1.3338.

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EURUSD Daily: August 29, 2013

Chart created by Benjamin Spier using Marketscope 2.0

-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to bbspier@fxcm.com .

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