fxs_header_sponsor_anchor

News

EUR/USD: Weakness could accentuate on CNY slide, focus on US GDP

  • EUR/USD fell to 2.5-month low yesterday, even though the ECB re-affirmed the intention to end asset purchases at year-end.
  • The CNY slide will likely keep the EUR better bid in Europe.
  • The outlook for yield differentials supports USD.
  • An upbeat US Q3 GDP report would only add to the bullish tone around the USD.

The EUR/USD fell to 1.1356 yesterday - the lowest level since Aug. 16 - and was last seen trading at 1.1365.

The European Central Bank (ECB) reaffirmed its commitment to end the asset purchase program in December despite Italy's budget concerns, Brexit impasse, and recent softer data.

Still, the EUR failed to pick up a bid as comments by the newly appointed Fed Vice Chair Clarida signaled that the Fed officials remain unfazed by the recent stock market rout and hence, yield differentials are set to widen further in a USD-positive manner.

Further, the Chinese yuan fell to a fresh 21-month low against the US dollar in Asia, triggering fears of a further escalation of a trade war between the US and China. The combination of weak CNY and the resulting risk aversion could keep the common currency on the back foot in Europe.

Clearly, the path of least resistance is on the downside and a better-than-expected US Q1 GDP reading would only hasten the drop the August low of 1.13.

The data, due today 12:30 GMT, is expected to show that the annualised GDP growth rate slowed to 3.3 percent in the third quarter from the previous quarter's growth rate of 4.2 percent.

A below-forecast GDP reading would be USD-negative, still, the gains in the EUR/USD may be limited as a sharp slowdown in the world's biggest economy may not bode well for the already risk-averse equities.

EUR/USD Technical Levels

Resistance: 1.1422 (former support-turned-resistance), 1.1468 (10-day MA), 1.15 (psychological hurdle)

Support: 1.1315 (200-week MA), 1.13 (August low), 1.1187 (61.8% Fib R of 1.0341/1.2556)

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.


RELATED CONTENT

Loading ...



Copyright © 2024 FOREXSTREET S.L., All rights reserved.