Euro under pressure on risk aversion

The EURUSD currency pair remains practically flat on Wednesday, hovering below the 1.1500 level and trading near 1.1480.

A risk-averse sentiment, amid sharp sell-offs in equities around the world, is underpinning demand for the safe-haven US dollar, and the mixed Eurozone data has failed to improve investors’ mood.

Data from the Eurozone and the German HCOB Services Purchasing Managers’ Index (PMI) revealed that the sector’s activity accelerated beyond expectations in both countries.

The Eurozone Producers’ Price Index (PPI), however, declined for the second consecutive month in October, adding pressure to the common currency.

The US dollar remains bid as investors rush for safety, with equities across the world selling off while they ponder the chances of further Fed monetary easing in the December meeting, amid hawkish comments from Fed Chairman Jerome Powell and diverging views from the central bank’s policymakers.

In the US, the government shutdown has extended into its fifth week, on track to become the longest on record.

This gives particular relevance to the ADP Employment report, due later Wednesday, and the ISM Services Purchasing Managers’ Index (PMI), both of which are likely to show mild rebounds after September’s downbeat figures.

In the absence of official employment data releases in the US, all eyes will be on the ADP Employment Change figures for further clues about the Fed’s rate path.

The report is forecast to show a net increase of 25,000 jobs in October, following a 32,000 decline in September, levels well below the 150,000 average new jobs created per month from 2010 to 2025.

EURUSD charts by TradingView

(Source: OANDA)