The euro still could not find any reprieve from the US dollar. EURUSD traded lower to its new four-week lows yesterday to 1.0994. The shared currency also remained under selling pressure in today’s Asian session as risk aversion continue to linger in the markets.
Yesterday, third-tier data from Europe did nothing to help the euro find bids. The final reading of Germany’s CPI for October came in just as expected at 0.1%. Meanwhile, euro zone industrial production showed a 0.1% uptick for the month which beat expectations for a 0.2% contraction.
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Auto Tariffs Decision Due Today
The lack of updates on the US-China trade deal and on the US’ investigation on auto tariffs for European-imported cars continued to make markets wary of buying the euro. Remember that US President Donald Trump has previously threatened to impose a 25% levy on foreign cars. Should this happen, the cost of European cars in the US would be 10,000 EUR more.
Today is the deadline for the Trump administration to announce if it will indeed impose levies or not. We will likely see an extension of the deadline which could provide allow market participants to breathe a sigh of relief.
US CPI Higher, Powell Remains Not-So-Dovish
As for the dollar, the headline CPI number for October printed at 0.4% which topped the 0.3% forecast while core CPI came in as expected at 0.2%. These inflation figures only affirmed Federal Reserve Chairman Jerome Powell’s remarks in his speech last night, saying that their monetary policy is “appropriate.”
Economic Data from Europe
For today, a few reports are scheduled for the euro with the preliminary reading of Germany’s Q3 GDP at 7:00 am GMT likely to have the biggest impact. It is expected that euro zone’s largest economy shrunk by 0.1% last quarter. Then at 10:00 am GMT, euro zone’s employment and GDP reports for the quarter are both eyed to show a 0.2% uptick in jobs and growth.
EURUSD Outlook
EURUSD is currently finding suppport at the 1.1000 psychological handle. Word about the US imposing levies on European cars or worse-than-expected German data, could trigger a stronger sell off. If this were to happen, we could see the currency pair test its next support level at 1.0940 where it bounced in September and October.
On the other hand, positive development on trade negotiations or better-than-expected data could be enough for 1.1000 to hold in today’s trading.Download our latest quarterly market outlook for our longer-term trade ideas.
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