Euro Drops Further Driven by Political Uncertainty and Weak Data

The  euro today fell to  new lows last seen in  mid-August against the  US dollar as  the  political uncertainty in  key eurozone countries such as  Germany and  Italy weighed on  the  single currency. The  release of  mixed macro data from the  euro area combined with the  strong employment data from the  USA also added to  the  selling pressure on  the  euro.
The  EUR/USD currency pair today dropped from a  high of  1.1360 to  a  low of  1.1307 as  sellers drove the  pair lower.
The  currency pair was in  a  tight range during the  Asian session before rallying slightly and  then heading lower. The  release of  the  German retail sales data for  September by  the  Federal Statistical Office had a  muted impact on  the  currency pair despite missing expectations. The  print came in  at  0.1% versus the  expected 0.5%, which translated into an  annualized decline of  2.6%. The  pair headed lower before the  release of  the  eurozone unemployment rate, which met expectations at  8.1%. The  eurozone headline and  core CPI prints for  October released by  Eurostat were also in  line with expectations by  coming in  at  an  annualized 2.2% and  1.1% respectively.
The  release of  the  US ADP employment change data, which beat expectations also drove the  pair lower. The  political uncertainty in  German regarding Angela Merkel’s impending departure and  Italy’s standoff with the  European Union also weighed heavily on  the  pair.
The  currency pair’s future performance is likely to  be affected by  European political events and  this weeek’s US macro releases.
The  EUR/USD currency pair was trading at  1.1331 as  at  15:38 GMT having recovered from a  low of  1.1307. The  EUR/JPY currency pair was trading at  128.17 having dropped from a  high of  128.53.

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