According to the latest data, the eurozone economy grew more than expected at the beginning of the year, although it has yet to fully feel the impact of the U.S. President Donald Trump's tariffs. So there was little reason to celebrate or buy the euro yesterday.

Gross domestic product in the first quarter increased by 0.4% compared to the previous three months, which is double the growth seen in the previous period. Economists had estimated growth at 0.2%.

The result means that the 20-country bloc has expanded output for five consecutive quarters, and its two largest members, Germany and France, both returned to growth. However, looking ahead, business surveys indicate a slowdown, mainly due to trust-eroding uncertainty around U.S. intentions.

European Central Bank Chief Economist Philip Lane said last week that trade tensions are unlikely to lead to a recession for the currency bloc, but acknowledged that growth would be lower than previously expected. He and his colleagues are weighing further interest rate cuts following the seventh reduction in mid-April, as many fear Trump's tariffs could cause long-term damage to the eurozone economy. At the same time, many ECB policymakers still believe inflation will return to the 2% target this year.

The report noted that GDP in Germany and France grew by 0.2% and 0.1% in the first quarter, respectively, in line with economists' forecasts. Growth in Italy exceeded expectations, coming in at 0.3%.

Now all eyes are on Friday, when eurozone inflation data will be released. Annual price growth is expected at 2.1% compared to last year, slightly lower than the previous month. However, the core figure — which excludes volatile categories like food and energy — is expected to rise to 2.5%.

For Germany, a positive GDP reading is a plus — especially for new Chancellor Friedrich Merz after the IMF predicted that Europe's largest economy would stagnate this year. Bundesbank President Joachim Nagel even warned of a possible third consecutive annual contraction due to the impact of Trump's trade policies. It's worth noting that Germany has been struggling for several years with weak global demand, the end of Russian energy imports, excessive regulation, and a shortage of skilled labor. However, there is hope for the longer term thanks to the new government's plans to spend hundreds of millions of euros on strengthening defense and infrastructure.

In France, disruptions caused by U.S. trade threats forced the government to lower its growth forecast for the year from 0.9% to 0.7%. Amid weakening economic conditions, it also introduced further spending cuts in an attempt to curb the budget deficit.

But as I mentioned above, the euro ignored the data on the currency market, as the outlook for further growth in the European economy remains quite murky.

As for the current technical picture of EUR/USD, buyers now need to think about how to reclaim the 1.1320 level. Only then can they target a test of 1.1380. From there, a move toward 1.1440 may be possible, but reaching it without support from major market participants will be quite difficult. The furthest target would be the 1.1480 level. In case of a decline, I expect significant buying interest only around the 1.1265 level. If there is no activity there, it would be best to wait for a retest of the 1.1215 level or open long positions from 1.1185.

As for the current technical picture of GBP/USD, pound buyers need to break through the nearest resistance at 1.3330. Only then can they aim for 1.3370, above which a breakout will be quite difficult. The furthest target would be the 1.3400 level. In case of a decline, bears will try to seize control at 1.3280. If successful, a breakout of this range would deliver a serious blow to bullish positions and push GBP/USD down to the 1.3250 low with a potential move toward 1.3205.