The EUR/USD pair experienced a dip on Thursday, testing the critical support level at the 200-day Exponential Moving Average (EMA). This week has seen limited economic data from the Eurozone, leading the EURO ’s path to largely depend on U.S. economic indicators. The pair managed to stay marginally above the 1.0900 level, closing lower but avoiding a more significant decline that would have taken it deeper below the 200-day EMA.
Recent U.S. inflation data revealed a slight decrease in headline Consumer Price Index (CPI) inflation, falling to 2.4% year-over-year in September from 2.5%. Market expectations had anticipated a number of 2.4%. Conversely, core CPI saw a small uptick, increasing to 3.3% from 3.2% year-over-year. Additionally, initial jobless claims rose unexpectedly, reaching 258,000, marking the highest weekly total since June 2023. This mixed bag of economic indicators has left financial markets uncertain, as rising unemployment may fuel hopes for potential rate cuts from the Federal Reserve while persistent inflation complicates the outlook for quicker monetary easing.
As Friday approaches, the lack of impactful European economic news means that EUR/USD movements will be largely dictated by the performance of the U.S. dollar. Investors will be paying close attention to the upcoming U.S. Producer Price Index (PPI) data, with expectations for September showing core PPI accelerating to 2.7% year-over-year. Additionally, consumer sentiment data from the University of Michigan is anticipated to reflect a modest improvement.
The EUR/USD has seen slight downward pressure, currently trading around 1.09343, a decrease of 0.05% for the day. As it tests the crucial 200-day EMA at approximately 1.09036, a breach of this support could trigger further selling, potentially pushing prices towards the significant psychological level of 1.08500. The recent bearish trend emphasizes the likelihood of continued weakness unless a notable reversal occurs. The overall market sentiment is increasingly driven by economic data and central bank policies, particularly given the strength of the U.S. dollar and ongoing concerns surrounding Eurozone economic stability.
