EUR/USD: Euro-zone’s inflation climbed in line with estimates in September


EURUSD Movement

For the 24 hours to 23:00 GMT, the EUR declined 0.21% against the USD and closed at 1.1610 on Friday, after the Italian government agreed to set a higher than expected budget deficit target.

Data indicated that Euro-zone’s final consumer price index (CPI) advanced 2.1% on a yearly basis in September, in line with market expectations. In the prior month, the CPI had recorded a rise of 2.0% while preliminary figures had also indicated a similar rise. Meanwhile in Germany, the seasonally adjusted unemployment rate unexpectedly declined to a rate of 5.1%, notching its lowest level since the German reunification in 1990 and following a reading of 5.2% in the previous month. Market participants had anticipated the unemployment rate to record a steady reading.

In the US, personal spending rose 0.3% on a monthly basis in August, at par with market consensus. In the preceding month, personal spending had registered a gain of 0.4%. Further, the nation’s personal income climbed 0.3% on a monthly basis in August, less than market anticipations for a rise of 0.4%. In the preceding month, personal income had recorded a similar rise. Moreover, the final Reuters/Michigan consumer sentiment index rose to a level of 100.1 in September, compared to market expectations of a rise to a level of 100.6. In the previous month, the index had registered a level of 96.2, while the preliminary figures had indicated an advance to 100.8. On the other hand, the US Chicago Fed purchasing managers index eased to a level of 60.4 in September, compared to a reading of 63.6 in the prior month. Markets had expected the index to drop to a level of 62.0.

In the Asian session, at GMT0300, the pair is trading at 1.1596, with the EUR trading 0.12% lower against the USD from Friday’s close.

The pair is expected to find support at 1.1560, and a fall through could take it to the next support level of 1.1525. The pair is expected to find its first resistance at 1.1641, and a rise through could take it to the next resistance level of 1.1687.

Going forward, investors would keep an eye on the Euro-zone’s unemployment rate and Germany’s retail sales data, both for August, along with the Markit manufacturing PMI for September, set to release across the euro-bloc in a few hours. Later in the day, the US ISM manufacturing PMI and the Markit Manufacturing PMI, both for September as well as construction spending data for August, will garner significant amount of trader’s attention.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

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