Euro Declines on Italy’s Defiance to the EU Amid Trade War Fears

The  euro today fell to  new 6-week lows against the  US dollar as  investors remained concerned about Italy’s defiance towards the  EU’s budget demands. The  risk-off sentiment in  the  market further contributed to  the  EUR/USD currency pair’s decline as  trade war fears dominated the  markets on  a  data-light Monday.
The  EUR/USD currency pair today dropped from an  opening high of  1.1529 to  a  low of  1.1458 in  the  early American session, but had recovered slightly at  the  time of  writing.
The  currency pair was on  a  downtrend from the  start of  today’s session largely due to  the  greenback’s recovery following Friday’s disappointing non-farm payrolls data. The  release of  the  German industrial production data by  the  Federal Statistical Office early in  the  European session also contributed to  the  pair’s decline as  the  print missed expectations. German industrial production contacted by  0.3% in  August as  opposed to  the  expected 0.3% expansion. The  release of  the  eurozone sentix investor confidence data shortly thereafter also dragged the  pair lower as  index came in  at  11.4 versus the  expected 11.7 figure.
The  rally by  US 10-year treasury yields, which hit a  high of  3.23%, and  the  greenback’s rally as  tracked by  the  US Dollar Index, which hit a  high of  96.03, also contributed to  the  decline. The Columbus Day celebrations in  the  USA had minimal impact on  the  pair.
The  currency pair’s future performance is likely to  be affected by  tomorrow’s German trade balance and  current account data.
The  EUR/USD currency pair was trading at  1.1479 as  at  16:39 GMT having declined from a  high of  1.1529. The  EUR/JPY currency pair was trading at  129.72 having dropped from a  high of  131.24.

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