EUR/USDÂ managed to recover from the Fed fallout (which sent it below the H&S line) but this may be over now, with the pair digging to fresh lows.
Can it challenge 1.25? Here are the reasons for the fall.
- Japanese Blitz: The BOJ surprised by taking the baton from the Fed announcing a huge addition to stimulus. This sent the yen lower against the the dollar, with USD/JPY reaching 111.50. With USD buying, EUR/USD falls.
- Weak German retail sales: After some good news from Germany yesterday, a big drop in unemployment, it’s back to gloomy data from the biggest economy in the continent: the volume of sales fell 3.2% in September, much worse than 0.9% expected. This weighs on the euro.
- French consumer spending disappoints: The continent’s number 2 economy is also showing signs of weakness with a 0.8% in consumer spending, worse than 0.3% expected.
- Euro-zone QE not ruled out: The Austrian central banker, Ewald Nowotny says “never say never†to QE. He is usually in the more hawkish camp in the ECB.
- End of month flows: Portfolio adjustments at the end of the week and the end of the month mean scrambles in the last moment, and this could also be having an impact.
EUR/USD dipped just below yesterday’s low and hit 1.2540, just 40 piips above the magical 1.25 line which it hit on October 3rd, which is also 80 cents on USD/EUR.
Can it fall lower? All eyes are now on the euro-zone inflation numbers for October.
See how to trade the CPI with EUR/USD.
