EUR/USD: Eurozone economic confidence soared to almost 17-year high level in October


EURUSD Movement

For the 24 hours to 23:00 GMT, the EUR rose 0.30% against the USD and closed at 1.1644, following better than expected Eurozone data.

On the macro front, economic confidence across the Eurozone climbed to its highest level since January 2001 in October, as it rose to 114.0 from a revised level of 113.1 reported in the previous month, suggesting that the region has shown some solid economic recovery following a decade-long economic and financial crisis. Markets had envisaged the economic confidence index to advance to 113.3. Moreover, the region’s business climate index rose more than expected to 1.44 in October, from 1.34 in September, registering its highest level since March 2011. Meanwhile, Eurozone’s final consumer confidence index advanced to -1.0 in October, in line with market expectations. In the previous month, the consumer confidence index had recorded a level of -1.2. The preliminary figures had also indicated an advance to -1.0.

In Germany, the powerhouse economy of the Eurozone, retail sales rebounded by 0.5% on a monthly basis in September, matching the forecast. Retail sales had fallen by a revised 0.2% in the previous month. Separately, Germany’s inflation eased more than expected to 1.6% YoY in October, following a rate of 1.8% in September.

In the US, consumer spending recorded a rise of 1.0% in September, more than market expectations for an advance of 0.9%. In the prior month, personal spending had risen 0.1%. Also, US personal income rose 0.4% in September, in line with market estimates. Additionally, the Dallas Fed manufacturing business index unexpectedly climbed to a level of 27.6, compared to a level of 21.3 in the prior month. Markets were anticipating the Dallas Fed manufacturing business index to ease to 21.0.

Meanwhile, a report stated that US President, Donald Trump, is likely to pick Federal Reserve (Fed) Governor, Jerome Powell, as the next Chair of the US Fed and an announcement about the same would be made by Trump on Thursday.

In the Asian session, at GMT0400, the pair is trading at 1.1635, with the EUR trading 0.08% lower from yesterday’s close.

The pair is expected to find support at 1.1605, and a fall through could take it to the next support level of 1.1576. The pair is expected to find its first resistance at 1.1661, and a rise through could take it to the next resistance level of 1.1688.

Moving ahead, traders will closely asses the Eurozone GDP data for the third quarter along with the region’s consumer prices for October, both due to release today. Additionally, in the US, the consumer confidence index and Chicago PMI data, both for October, along with the home price index for August, will be on investors’ radar.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

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