Euro Drops to 2-Month Lows on Weak PMI Data Amid Italian Politics

The  euro today tumbled to  new lows against the  US dollar due to  the  current impasse between the  European Union and  Italy regarding the  country’s 2019 budget. The  euro was further weighed down by  the  disappointing PMI data from across the  euro area released by  Markit Economics earlier today, which indicated an  economic slowdown in  the  region.
The  EUR/USD currency pair today fell from a  high of  1.1476 to  a  low of  1.3925 and  was trading slightly above its lows at  the  time of  writing.
The  currency pair opened today’s session on  a  slight downtrend before plunging to  new lows in  the  early European session following the  PMI releases. The  Markit Flash Germany Manufacturing PMI for  October missed expectations by  coming in  at  52.3 versus the  expected 53.4 print. The  Markit Germany Services PMI also came in  at  53.6, which was lower than the  consensus estimate of  55.5. The  Markit Flash Eurozone Manufacturing PMI also disappointed by  coming in  at  52.1, which was lower than the  expected print of  53.0. The  Markit Eurozone Services PMI also missed consensus estimates. The  disappointing PMI prints triggered the  pair’s massive plunge.
The  war of  words between the  European Union and  Italy regarding yesterday’s rejection of  the  Italian budget by  the  EU also dragged the  pair lower as  Italy remains adamant in  its plan to  implement a  2.4% deficit in  its 2019 budget.
The  release of  the  US house price index and  Markit US manufacturing and  services PMIs are likely to  influence the  pair’s short-term performance.
The  EUR/USD currency pair was trading at  1.1388 as  at  12:11 GMT having dropped from a  high of  1.1476. The  EUR/JPY currency pair was trading at  128.38 having declined from a  high of  129.21.

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