Euro extends its slide as US surveys top Europe's strong reading
Europe's September business surveys were the strongest since April 2023, and the Euro fell to its lowest since late July on the day they came out. The eurozone's flash Purchasing Managers Index (PMI) composite reading came in at 53.1 against a 51.5 forecast, with services at 53 against 51.7.
On September 22, Europe's business surveys surged to their strongest levels since April 2023, causing the Euro to plummet to its lowest level since late July on the same day. The Eurozone's flash Purchasing Managers Index (PMI) composite reading measured 53.1, surpassing the 51.5 forecast, with services at 53 against 51.7. EUR/USD is currently trading near 1.1400, marking the third consecutive losing day.
The Euro only gains value if it influences the European Central Bank (ECB) decisions, which has already occurred. The ECB increased its deposit rate to 2.50% on September 10, marking its second hike this year. Meanwhile, US surveys exceeded forecasts by a greater margin, prompting traders to bet on an additional Fed increase on October 28.
ECB Executive Board member Schnabel will speak on Thursday at 07:15 GMT, while ECB Chief Economist Lane will address the press at 09:00 GMT. Both officials have strong survey data to argue for another rate hike. The ECB's next decision is on October 29, just a day after the Fed's, meaning policymakers will vote once the Fed's decision is known.
Germany's governing coalition is also expressing concern publicly after losses in two state elections, adding another reason for caution on the Euro, even on a day of strong data. US weekly jobless claims are expected on Thursday at 12:30 GMT, with a forecast of 201K. A rise in claims would swiftly temper expectations for an October Fed hike.
Resistance at 1.1400 was broken on Wednesday, and 1.1450 served as the support floor since September 16 until Tuesday. Above that, 1.1500 has capped every session from September 17 to Monday. Support at 1.1350 comes first, and the late-July low is just above it. Beyond that, the late-June low near 1.1300 is the next target. Traders are advised to go short below 1.1450, targeting 1.1350 and 1.1300 as objectives.
The daily Stochastic Relative Strength Index (Stoch RSI) is near 8, indicating oversold territory, which may lead to bounces before hitting objectives. A daily close above 1.1500 removes the short from the equation. The Euro is the currency of the 20 European Union countries in the Eurozone, the second most heavily traded globally after the US Dollar.
In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion.
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