EURUSD Movement
For the 24 hours to 23:00 GMT, the EUR declined 0.84% against the USD and closed at 1.1377, after Ewald Nowotny, a member of the ECB’s governing council, stated that the central bank is “clearly” missing its consumer price inflation target and recommended the use of additional monetary stimulus measures to shore up growth and inflation in the Euro-zone.
In the US, consumer prices fell 0.2% MoM in September, in line with market expectations, after slipping 0.1% in August, recording its biggest drop in eight months. The downbeat inflation data has further dimmed expectations that the Fed will soon raise key interest rates.
Other economic data showed that initial unemployment claims dropped by 7.0k to 255.0k in the week ended 10 October, to reach its lowest level in four decades, compared market expected figure of 270.0k. Meanwhile, continuing jobless claims declined by 50.0k to 2.16 million in the week ended 03 October, its lowest level since November 2000. On the other hand, the US monthly budget statement reported a surplus of $91.0 billion in September.
In other economic news the Philadelphia Fed manufacturing survey index contracted for the second consecutive month, to a reading of -4.5 in October, compared to -6.0 in September.
Separately, the Cleveland Fed President, Loretta Mester stated that the US economy can sustain an increase in the central bank’s interest rates despite the risks to outlook presented by the global environment. She further added that interest rates should move up gradually.
Elsewhere, the New York Fed President, William Dudley, reiterated his view that an interest rate hike was likely by the year’s end if the US labour market continued to strengthen and the economy kept growing above trend. However, he also noted that developments in China and emerging market economies have the potential to hurt the nation’s economy.
In the Asian session, at GMT0300, the pair is trading at 1.1382, with the EUR trading marginally higher from yesterday’s close.
The pair is expected to find support at 1.1328, and a fall through could take it to the next support level of 1.1274. The pair is expected to find its first resistance at 1.1466, and a rise through could take it to the next resistance level of 1.1550.
Moving ahead, market participants will look forward to Euro-zone’s consumer price index and trade balance data, scheduled to be released in a few hours. In addition to this, the US flash Reuters/Michigan consumer sentiment index and industrial production data, scheduled to be released later today, would be closely watched by investors.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.