The EURUSD currency pair is under pressure, trading in the 1.1060s on Wednesday, after the pair fell from 1.1135 on Tuesday, in a sell-off that amounted to a 0.60% one-day decline.
Lower-than-expected Eurozone inflation was partly responsible for the sharp decline.
The bloc’s Harmonised Index of Consumer Prices (HICP) grew by 1.8% YoY in September, down from 2.2% previously and below expectations of 1.9%. Core inflation, meanwhile, came out at 2.7% YoY – a tenth below August’s 2.8% and also below expectations.
The data indicates headline inflation has fallen back down below the European Central Bank’s 2.0% target, and that core is on its way.
It increases the chances that the ECB will cut interest rates further, which, in turn, is likely to lead to outflows and a weaker Euro.
The Greenback gained after the release of data showing a higher-than-expected rise in the number of job openings in the US, as measured by JOLTS Job Openings, which rose to 8.04 mln in August from a revised-up 7.71 mln in July, and beat expectations of 7.66 mln.
The data is significant because of the Federal Reserve’s recent shift to focusing on concerns around the labour market. This broadly offset weaker US manufacturing activity data, as measured by the ISM Manufacturing PMI, which flatlined in contraction territory and missed expectations in September.
EURUSD also sold off amid an escalation in geopolitical tensions in the Middle East, which increased safe-haven flows to the US Dollar.
On Tuesday evening, Iran fired about 200 missiles, including some ballistic, at Israel’s capital Tel Aviv in a revenge attack after Israel killed Hasan Nasrallah, the head of the Iran-backed militia group Hezbollah.
The main releases likely to impact the EURUSD pair on Wednesday are the Eurozone Unemployment Rate for August; US ADP Employment Change data for September and comments from Fed officials, including Fed Governor Michelle Bowman and Richmond Fed President Thomas Barkin.
In a technical analysis, the EURUSD pair is possibly beginning its descent within multi-year range.
The Euro-Dollar has been contained within a broad multi-year range that has a ceiling at roughly 1.1200 and a floor at around 1.0500. The pair is currently testing the top of the range, but after multiple touches appears to be pulling back down.
EURUSD daily chart by TradingView
(Source: OANDA)
