Euro Outlook: EUR/GBP, EUR/USD Eye ECB Rate Decision, Eurozone PMI
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Euro Price Chart, EUR/GBP, EUR/USD, Brexit, ECB – Talking Points
- Euro may fall on ECB outlook, Draghi commentary
- Eurozone PMI report may magnify market volatility
- US factory orders could amplify global growth fears
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The Euro may fall against the US Dollar if the ECB rate decision, commentary and outlook on growth spook regional investors. EUR/USD’s decline could be amplified by the release of Eurozone PMI data, though its fall could also be tempered by a weaker US Dollar if local factory orders disappoint. Meanwhile, sporadic Brexit developments continue to haunt markets which could trigger market-wide volatility as the clock ticks.
ECB Rate Decision: Mario Draghi’s Parting Words
The October ECB meeting will carry particular significance because it will be the last press briefing Mario Draghi will hold as the central bank’s president. His successor, the former Director of the IMF Christine Lagarde, is expected to follow in his footsteps and continue to implement powerful easing. However, inflationary prospects in the Eurozone are showing a gloomy picture and a hefty challenge for Ms. Lagarde.
The Euro may therefore end the day in the red if shy hopes of an economic recovery are eclipsed by the shadow of trade wars and geopolitical uncertainty. The US and EU’s horns are still locked in an economic fight with the former having recently slapped multi-billion Dollar tariffs against the latter. Slower growth out of Germany and restrictive Eurozone fiscal rules – with interest rates in negative territory – leaves policymakers anxious.
EUR/USD may briefly oscillate before ending the day lower if the downward pressure on the Euro from the ECB and Eurozone PMI data overwhelms the weight of underperforming US factory order reports on USD. The Greenback’s sharp decline for the past three weeks has helped push EUR/USD to break above downward-sloping resistance, though the pair’s ascendancy may soon lose steam and resume its previous downtrend.
With Brexit “in limbo” – to quote John Bercow – the British Pound may continue to hover until more clarity is given on the situation. Therefore, the pressure from the ECB and PMI data could push the pair lower as Sterling trades sideways. However, if major Brexit updates are announced, the volatility it could elicit from the Pound could overwhelm the Euro’s moves and send EUR/GBP in whatever direction Sterling chooses.
Market Analysis of the Day: Eurozone, German Manufacturing PMI Falling Alongside German Bund Yields
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--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitri on Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.