Euro Slips Amid Weak EU data

Fundamental Analysis

* Data Slump: The Euro is weakening against the dollar after weak inflation data cast a bleak outlook for the Eurozone. The headline inflation rate, represented by the CPI, dropped to 1.8%—marking the first time in 39 months that it has fallen below the European Central Bank’s (ECB) 2.0% target. This increases the likelihood that the ECB will take a more aggressive approach to cutting interest rates, a move that could further weigh on the Euro by discouraging foreign capital inflows. In contrast, in the U.S., market expectations for the Federal Reserve to follow its recent 50 basis point rate cut with another in November are diminishing, providing support for the U.S. dollar. Robust U.S. jobs data is helping calm fears of a severe economic downturn, with JOLTS Job Openings rising to 8.04 million in August from a revised 7.71 million in July, and ADP Employment Change increasing to 142K in September, exceeding both the prior month’s 103K and expectations of 120K.

Technical Analysis

* Technical Breakout: The price recently breaks below its recent bearish market structure and MACD remains on bearish signals potential for further losses.

*Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards the support level 1.09450 after it breach below the level 1.10250. Conversely, a potential reversal is also to be expected and the price could head back towards 1.11100.

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Potential Risks

Looking ahead, markets now await the US’s most important labor report, the Nonfarm Payrolls (NFP) scheduled for release on Friday to further gauge Fed potential direction.

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Monitoring

Stay updated on US and EU data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.