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EUR Mixed As Eurozone July Consumer Confidence Falls to Three Year Low

EUR Mixed As Eurozone July Consumer Confidence Falls to Three Year Low

Tzu-Wen Chen, Technical Strategist

THE TAKEAWAY: [Euro zone consumer confidence plunges in July to lowest level since June 2009] > [Adds to signs slumping euro economy is heading into recession] > [EURUSD mixed]

Consumer confidence in the 17-nation euro-zone plummeted in August to its lowest level since June 2009, adding to signs that the slumping euro-area economy is heading into a recession. The Brussels-based European Commission reported today that the flash consumer confidence indicator in the euro bloc fell to -24.6 in July from -21.5 the previous month. The consensus forecast according to 27 economists surveyed by Bloomberg News had called for a reading of -22.0.

Recent budget cuts in several nations have driven businesses to cut jobs, dampening consumer spending. Additionally, ongoing contraction in the manufacturing and services sectors and the decline in household sentiment could signal that the Eurozone economy is sliding into its second recession in three years.

EURUSD 1-minute Chart: August 23, 2012

EUR_Mixed_As_Eurozone_July_Consumer_Confidence_Falls_to_Three_Year_Low_body_Picture_1.png, EUR Mixed As Eurozone July Consumer Confidence Falls to Three Year Low

Chart created using Market Scope – Prepared by Tzu-Wen Chen

Trading of the Euro was mixed following the release of the weaker-than-expected consumer confidence figures. The EURUSD pair was little changed in the first 20 minutes after data release. However, at the time this report was written, the euro had risen against the U.S. dollar to trade at $1.2570.

--- Written by Tzu-Wen Chen, DailyFX Research

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.