Market Analysis

Euro falls to a new 2019 trading low ahead of key data releases

The euro currency fell to its lowest trading level against the U.S dollar since May 2017 earlier this morning, as the single currency repeatedly failed to attract buying interest above the 1.0960 level on Thursday. The EUR/USD pair has traded under pressure for most of the trading week due to extremely weak EU PMI data and renewed demand for the greenback.

The U.S Dollar has surprised many traders as it continues to rise against a basket of top currencies, despite possible impeachment charges against U.S President Donald Trump and fears over a push-back in the timing of upcoming trade talks between Washing and Beijing.

With the euro currency back at multi-year trading lows against the U.S Dollar, the release of key EU CPI inflation and unemployment data next week has the potential to further negatively impact the single currency. Initial estimates suggest that upcoming EU consumer price inflation data is going to miss the European Central Banks inflation targets.

Furthermore, the official EU unemployment rate could be impacted by the recent job lay-offs in the German manufacturing sector and weakness in the periphery of Europe. PMI figures earlier this week showed that German factory activity fell to its weakest level since mid-2009.

The EU unemployment rate has been steadily trending lower and is currently trading at an eleven-year low, of 7.5 percent. An upward reversal in the EU unemployment rate and continued weakness in EU inflation will increase speculation that the European Central Bank will be considering increasing its monthly QE purchases at the October or November ECB policy meetings.

The single currency is likely to struggle to come back against the greenback with the central bank’s ultra-loose monetary policy in play and a weakening European economy. The only hope for the EUR/USD pair would be a change in fundamentals such as a sudden downturn in the U.S economy or an unexpected U.S political event.
Next week, the September ISM manufacturing report and monthly United States jobs report will shed some much-needed light on the current state of the American economy.


 EUR/USD Daily Candlestick Chart | Source: ActivTrader

EUR/USD Daily Candlestick Chart | Source: ActivTrader


From a technical perspective the EUR/USD pair is vulnerable to losses towards the 1.0850 level if the 1.0900 support zone is breached with conviction. Key upside technical resistance is currently located at the 1.1000 and 1.1110 levels.


Written by Nathan Batchelor, External Analyst, ActivTrades

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