- EUR/USD has fallen by 8/10 percent over the week.
- The fiber optic tender is being dashed by a baffling speech from ECB planners.
- EU and US PMI data to be released on Thursday could spark new momentum.
EUR/USD fell another fifth of a percentage point on Wednesday as the fiber collapsed ahead of Thursday's new Purchasing Managers Index (PMI) release. ECB officials trumped concerns about the economy and reiterated the need for caution when considering future rate cuts. The foreign exchange market reacted immediately, causing the euro to plummet further, hitting a 16-week low.
Global PMI statistics are scheduled to be released sequentially on Thursday. The market has high expectations for the results of the pan-EU PMI survey, with the median market forecast predicting that the EU services PMI will be 51.6 in October, slightly up from 51.4 in September. Regarding the US, the median market forecast expects mixed US PMI readings in October, with the manufacturing sector PMI expected to rise from 47.3 to 47.5, while the services sector PMI is expected to rise from 55.2 to 55.0. is expected to decline slightly.
EUR/USD price prediction
EUR/USD continues to fall as it tests support near the 1.0780 level. Recent price action currently shows a significant breakdown below both the 50-day EMA at 1.0975 and the 200-day EMA at 1.0908, indicating that market sentiment is shifting to the downside. Sustained selling pressure has pushed the pair into bearish territory, with sellers eyeing further declines towards the 1.0750 support zone. A break below this key psychological level could lead to more aggressive selling towards the 1.0700 handle.
The MACD indicator remains in bearish territory, the MACD line continues to trend below the signal line, and the histogram deepens with negative values. This suggests that the downward momentum is still intact and any attempt at a reversal could face stiff resistance. Traders should watch out for oversold conditions, but the bearish bias is likely to persist as long as the price remains below the moving average. If there is a rebound from current levels, it could face immediate resistance near 1.0900, which would be an important level to watch for potential short selling opportunities.
EUR/USD daily chart
Euro Frequently Asked Questions
The euro is the currency of the 19 European Union countries that belong to the euro area. It is the second most traded currency in the world after the US dollar. In 2022, Accounted for It accounts for 31% of all foreign exchange transactions and has an average daily trading volume of over $2.2 trillion. EUR/USD is the most frequently traded currency pair in the world. accounting An estimated 30% discount on all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB), located in Frankfurt, Germany, is the reserve bank of the euro area. The ECB sets interest rates and controls monetary policy. The ECB's main task is to maintain price stability, which means controlling inflation or stimulating growth. The main means of doing so is raising or lowering interest rates. Relatively high interest rates, or expectations of rising interest rates, usually benefit the euro, and vice versa. The ECB Governing Council decides monetary policy at its eight annual meetings. Decisions will be made by the heads of the euro zone national banks and the six permanent members of the ECB, including Christine Lagarde, president of the ECB.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric indicator for the euro. If inflation rises more than expected, especially above the ECB's 2% target, the ECB will mandate interest rate hikes to rein in inflation. Relatively high interest rates compared to other countries typically benefit the euro, as it makes the region more attractive to global investors as a place to park their funds.
The data release will gauge the health of the economy and could have an impact on the euro. Indicators such as GDP, manufacturing and services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the euro. This could not only attract more foreign investment but also prompt the ECB to raise interest rates, which could directly lead to a stronger euro. Otherwise, if economic indicators are weak, the euro is likely to weaken. Economic data for the euro area's four largest economies (Germany, France, Italy and Spain) is particularly important, as they account for 75% of the euro area economy.
Another important data regarding the euro is the trade balance. This indicator measures the difference between what a country earns from exports and what it spends on imports over a given period of time. If a country produces highly sought-after export goods, the value of its currency increases purely due to the additional demand generated from foreign buyers seeking to purchase these goods. Therefore, if the net trade balance is positive, the currency strengthens, and vice versa if it is negative.
