EURUSD extends losses as the Euro weakens and the US Dollar strengthens.
EURUSD is under pressure, trading in the 1.1060s on Wednesday, after falling from 1.1135 on Tuesday, resulting in a 0.60% one-day drop.
Lower-than-expected Eurozone inflation figures contributed to the dramatic fall. In September, the bloc’s Harmonized Index of Consumer Prices (HICP) increased by 1.8% year on year, down from 2.2% the previous month and falling short of 1.9% expectations. In contrast, core inflation was 2.7% year on year. – one-tenth of a percentage point lower than August’s 2.8% reading and below expectations.
The numbers show that headline inflation has slipped back below the European Central Bank’s (ECB) 2.0% target, while core inflation is on its way. It raises the likelihood that the ECB will lower interest rates further, which is likely to result in capital outflows and a weaker euro.
The recently reported Eurozone Unemployment Rate had minimal impact on the pair, as it showed unemployment remained steady at 6.4% in August, unchanged from July’s number and in line with expert estimates.
EURUSD losses worsened by strengthening USD.
EURUSD was also driven lower following the US Dollar’s (USD) recovery on Tuesday.
The greenback strengthened after the release of data showing a higher-than-expected increase. The number of job opportunities in the United States, as measured by JOLTS Job opportunities, increased to 8.04 million in August from a revised 7.71 million in July, exceeding estimates of 7.66 million.
The report is relevant because the Federal Reserve (Fed) has recently shifted its focus to labor-market worries. This largely countered poor US factory activity statistics as measured by the ISM factory PMI, which flatlined in contraction territory and fell short of forecasts in September.
The escalation of the Middle East war has spurred safe-haven flows into USD.
EURUSD also fell as geopolitical tensions in the Middle East worsened, increasing safe-haven flows to the US dollar. On Tuesday evening, Iran fired over 200 missiles, some of which ballistic, at Israel’s capital Tel Aviv in a reprisal attack after Israel assassinated Hasan Nasrallah the leader of the Iranian-backed armed group Hezbollah.
More job-related statistics on the horizon.
The primary announcements that expected to have an influence on EURUSD on Wednesday are US ADP Employment Change data for September and remarks from Federal Reserve (Fed) officials, notably Fed Governor Michelle Bowman and Richmond Fed President Thomas Barkin.
