Euro Outlook, EUR/USD, Eurozone – Talking Points
- Euro may suffer if German CPI, Eurozone confidence data spooks regional investors
- EUR/USD broke through short-tern uptrend, opening the door to resume prior descent
- FOMC rate decision, press briefing US GDP data may amplify EUR/USD downtrend
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EUR/USD may fall if critical Eurozone data saps capital away from the Euro amid a fear frenzy about the region’s growth prospects. Key indicators traders will be watching are industrial, consumer and business confidence and German CPI data; France GDP data is also on the radar. Volatility from these releases may be amplified by the FOMC rate decision, subsequent press briefing and US Q3 GDP data.
Eurozone confidence data is broadly expected to show soft prints, particularly the industrial report. Globally, the manufacturing sector has been under assault from weakening growth prospects caused in large part from the US-China trade war. The contraction is becoming so severe, that economists are calling it an “industrial recession”, and it may not be too long until the weakness spills over into the services sector.
As the biggest Eurozone economy – and third-largest exporter in the world – German data commands the attention of Euro traders because of what poor performance there could mean for the region. While local unemployment claims are expected to remain unchanged at 5%, preliminary year-on-year CPI is anticipated to show a one percent print, slightly weaker than the previous 1.2 percent reading.
Fed Chairman Jerome Powell is like EF Hutton: when he talks, everybody listens; the caveat being markets may not appreciate what he has to say. Investors are yearning for ultra-aggressive easing expectations, and what they will likely receive is a prudent answer outlining how the central bank is data dependent. This may then lead to stronger US Dollar and weaker EUR/USD exchange rate against the backdrop of European data.
Market Analysis of the Day: EUR/USD Downtrend May Accelerate After Pair Broke Through Short-Term Uptrend
EUR/USD chart created using TradingView
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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
