- EUR/USD fell 0.6% on Tuesday as risk flows drag down the price of Fiber.
- The escalation of the situation in the Middle East worsened the already hard investor sentiment.
- EU HICP inflation and US ISM PMIs are generally not true.
The EUR/USD rate fell six-tenths of one percent on Tuesday, registering a modest rebound from the 1.1050 level, as geopolitical tensions and deteriorating economic data restrict the flow of risk appetite, strengthening the dollar and dragging the fiber to its lowest prices in almost a month.
Inflation in the Harmonized European Index of Consumer Prices (HICP) declined at a faster pace than expected in September. Core HICP inflation y/y fell to 2.7% on an annual basis, while headline HICP inflation on a monthly basis fell to just 1.8% in September, an even faster fall from the previous 2.2% than forecast at 1 .9%.
Forex Today: The US labor market will be in the spotlight with Fed speeches
European economic data will remain in the background for the remainder of the week as investors turn to Friday’s upcoming non-farm payrolls (NFP) report. A trickle of collectively significant but individually meaningless economic data litters the landscape leading up to Friday’s NFP jobs report, and investors grapple with middling releases that tend to miss the mark.
In September, the US ISM manufacturing PMI remained at 47.2 for the second month in a row, below the expected boost to 47.5. Additionally, the ISM Manufacturing Price Paid fell to 48.3, down from the previous 54.0, indicating a decline. Shifting the focus to U.S. employment data, the number of JOLTS job postings in August increased to 8.04 million, exceeding the revised 7.7 million from the prior period. Still, the boost in job offers may not translate directly into employment, as the ISM manufacturing sector employment rate for September fell to 43.9 from the previous 46.0, falling miniature of the expected boost to 47.0.
Turning to geopolitical issues, investors’ attention turned to the Middle East following reports that Iran launched a missile attack on Israel in response to Israel’s recent incursion into Lebanon. The United States pledged support to Israel, which raised investor concerns about a potential rapid escalation of the conflict.
EUR/USD price forecast
Tuesday’s decline brought the fiber price within inches of the 50-day exponential moving average (EMA) near 1.1045. EUR/USD found some bids delayed in the day, but the pair remains heavily unbalanced, completely reversing its recent rally to yearly highs above 1.1200.
With highs slipping out of reach for intraday bidders, buyers are now on the defensive and near-term momentum is increasingly bearish. The immediate short-term goal of bidding pressure will be to push the bidding line back above the 1.1100 level.
