EUR/USD bounces off 1.1050 on Tuesday decline
EUR/USD tumbled six-tenths of one percent on Tuesday, finding a minor bounce from the 1.1050 level as geopolitical tensions and souring economic data crimp risk appetite flows, bolstering the Greenback and dragging the Fiber to its lowest prices in almost a month.
European Harmonized Index of Consumer Price (HICP) inflation ticked lower at a faster pace than expected in September. YoY core HICP inflation ticked down to 2.7% on an annual basis, while MoM headline HICP inflation swooned to just 1.8% in September, an even faster drop from the previous 2.2% than the forecast 1.9%.
European economic data will take a backseat for the remainder of the week as investors pivot to face Friday’s upcoming Nonfarm Payrolls (NFP) report. A trickle of meaningful-in-the-aggregate yet individually meaningless economic data litters the landscape on the road to Friday’s NFP jobs report, and investors are grappling with middling releases that are routinely missing the mark.
In September, the US ISM Manufacturing PMI remained at 47.2 for the second consecutive month, falling short of the expected increase to 47.5. Additionally, ISM Manufacturing Prices Paid dropped to 48.3, down from the previous 54.0, indicating a contraction. Shifting focus to US employment data, JOLTS Job Openings in August surged to 8.04 million, surpassing the revised 7.7 million from the previous period. Despite this, the increase in job openings may not directly translate into new hires as the ISM Manufacturing Employment Index for September declined to 43.9 from the previous 46.0, failing to meet the anticipated rise to 47.0.
Turning to geopolitical concerns, investor attention has pivoted towards the Middle East following reports of Iran launching a missile attack against Israel in response to Israel's recent incursion into Lebanon. The US has pledged to respond in support of Israel, leading to apprehension among investors about a potential rapid escalation of the conflict.
EUR/USD price forecast
Tuesday’s backslide saw Fiber price action come within inches of the 50-day Exponential Moving Average (EMA) near 1.1045. EUR/USD found some bids late in the day, but the pair remains firmly off-balance, entirely reversing the latest bullish push into yearly highs above 1.1200.
With highs slipping out of reach of intraday bidders, buyers are now on the defensive and near-term momentum is leaning increasingly bearish. The immediate near-term goal for bidding pressure will be to drag the bidding line back above the 1.1100 handle.
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