EUR/USD slips below 1.1065 support
|The risk rally stalled yesterday with news flow very thin and markets awaiting more clues from trade. German factory orders surprised on the upside but had little to no direct market impact. The same goes for slightly better than expected final EMU PMI's. Headlines that the partial trade deal might not be signed until December as a new location is still under discussion triggered knee jerk losses in US stock markets and yields. Both later recovered however. EUR/USD initially held an upward bias but clearly lacked momentum. The couple eventually closed marginally lower at key support around 1.1065/75 (1.1066 from 1.1075). USD/JPY closed shy of 109 (108.98 from 109.16).
Recent trade optimism also fades during Asian trading hours. Equity markets are trading mixed, at best, amid very scant news and data. The Chinese yuan is giving up on recent gains which drove USD/CNY back below 7. A cautious risk sentiment is sending the yen deeper below USD/JPY 109 (108.73 at the time of writing). Kuroda said the BoJ will continue with massive monetary easing to reach the 2% inflation target. The yen isn't really impressed though. EUR/USD, currently trading at 1.106, slipped below 1.1065 support.
Today's European Commission's autumn economic forecasts are worth mentioning. However, the remainder of the eco calendar won't be of any importance for markets, leaving trading mostly up to technical factors. This morning's break of EUR/USD 1.1065 following the possible delay in the partial deal suggest the euro is more vulnerable to trade developments. We don't draw any firm conclusions as the break has yet to be confirmed but this move at least questions the short term upward bias of the couple. In combination with a mild risk off, it might keep the euro further in the defensive.
Sterling trading was mainly technical in nature yesterday while the UK election campaign kicked off. EUR/GBP held an upward bias, closing at 0.861. The Bank of England is convening today and publishes a new inflation report. We're keen to see whether the central bank will complete it's U-turn to an easing bias. Doing so might add pressure on sterling in a daily perspective. We don't expect any significant moves however. EUR/GBP is likely to be trapped in its sideways trend channel as markets await the outcome of the elections.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.