Article by ForexTime
EUR/USD tumbled to a fresh trend low at 1.2584 following Eurozone inflation data that showed HICP declining back to 0.3% year over year, in the flash September estimate despite the uptick in the Spanish headline rate and unchanged German numbers. Eurozone core inflation also dipped to 0.7% year over year from 0.9% year over year.
Eurozone September HICP inflation fell back to 0.3% year over year, in line with median expectations and despite the uptick in the Spanish headline rate and unchanged German numbers released Monday. At the same time core inflation fell back to 0.7% year over year from 0.9% year over year. The data helped yields decline and will likely revive hopes for further measures from the ECB, although the latest round of easing will not have had time to reach the real economy.
Draghi’s best bet for a quick fix seems to be continued verbal intervention on the Euro, although keeping the door open for QE also means that a weak data round revises hopes of asset purchases and fresh investment in Eurozone stocks and bonds.
Eurozone unemployment remained steady at 11.5% in August, unchanged from July, in line with expectations. The country breakdown showed a slightly decline in the Spanish and Irish rates, which shows again that structural reforms can have a positive impact. Discrepancies across Eurozone countries remain very high, with rates ranging from just 4.7% in Austria to 24.4% in Spain, although the Greek headline rate is likely to be even higher, as it stood at 27.0% in June, the last month for which data are available.
German September unemployment unexpectedly rose 12K, against expectations for a slight decline after the 3K uptick in August. The second months of rise will add to concerns that the German recovery is threatened to be derailed by geo-political tensions, although the seasonally adjusted jobless rate remained steady at 6.7% and employment numbers continued to rise in August, the last month for which data are available.
Free Reports:
The EUR/USD is poised to test target support near 1.20. Resistance is seen near the 10-day moving average at 1.2770. Momentum has turned negative with the MACD (moving average convergence divergence) index generating a sell signal. This occurs when the spread (the 12-day moving average minus the 26-day moving average) crossing below the 9-day moving average of the spread. The RSI (relative strength index) moved lower with price action reflecting accelerating negative momentum while printing a reading of 21, which is well below the oversold trigger level of 30 and could foreshadow a correction.
ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com
