EUR/USD – Euro slide resumes as manufacturing growth slows

The euro has resumed its losing ways in the Wednesday session, after taking a brief pause on Tuesday. Currently, the EUR/USD is trading at 1.1405, down 0.53% on the day. On the release front, German and Eurozone Manufacturing PMIs slowed in October and missed expectations. German Manufacturing PMI dropped to 52.3, short of the estimate of 53.4 points. The eurozone release fell to 52.1, down to 53.0 points. German and Eurozone Services PMIs followed a similar trend. Still, the manufacturing and services releases all indicated expansion. On Thursday, the ECB is holding its policy meeting and will set the main financing rate.

All eyes are on the ECB, with policymakers widely expected to hold the course with interest rate levels, which have been pegged at a flat 0.00% for almost three years. However, there are no shortage of geopolitical hot spots, including the spike in Italian bond yields, the Brexit impasse and continuing volatility in global equity markets. Despite these issues, the ECB is expected to end its massive stimulus program in December. The markets are now looking ahead to 2019, focusing on the timing of a rate hike. The ECB has adhered to the line that rates will stay on hold “through the summer of 2019”. However, it’s unlikely that policymakers can ignore the issue of a rate hike, which would be a historic move, as the bank last raised rates in 2011. The head of the Dutch central bank, Klaas Knot, recently said that the ECB will have to initiate discussions over the timing of a rate hike in January. Investors will be listening closely to ECB members, as any hints of an interest rate move could send the euro upwards.

China shares lead the way upwards, again

Asia Market update : China equities on a random walk

When the (equity) walls come tumbling down

EUR/USD Fundamentals

Wednesday (October 24)

• 3:15 French Flash Manufacturing PMI. Estimate 52.4. Actual 51.2
• 3:15 French Flash Services PMI. Estimate 54.7. Actual 55.6
• 3:30 German Flash Manufacturing PMI. Estimate 53.4. Actual 52.3
• 3:30 German Flash Services PMI. Estimate 55.5. Actual 53.6
• 4:00 Eurozone Flash Manufacturing PMI. Estimate 53.0. Actual 52.1
• 4:00 Eurozone Flash Services PMI. Estimate 54.5. Actual 53.3
• 4:00 Eurozone M3 Money Supply. Estimate 3.5%. Actual 3.5%
• 4:00 Eurozone Private Loans. Estimate 3.2%. Actual 3.1%
• 9:00 Belgian NBB Business Climate. Estimate 0.5
• 9:00 US HPI. Estimate 0.3%
• 9:45 US Flash Manufacturing PMI. Estimate 55.5
• 9:45 US Flash Services PMI. Estimate 54.1
• 10:00 US New Home Sales. Estimate 630K
• 10:30 US Crude Oil Inventories. Estimate 3.6M
• 13:00 US FOMC Member Raphael Bostic Speaks
• 13:10 US FOMC Member Loretta Mester Speaks
• 14:00 US Beige Book

*All release times are DST

*Key events are in bold

EUR/USD for Wednesday, October 24, 2018

EUR/USD for October 24 at 7:00 DST

Open: 1.1471 High: 1.1477 Low: 1.1403 Close: 1.1405

EUR/USD Technical

EUR/USD was flat in the Asian session and has posted considerable losses in European trade

• 1.1300 is under pressure in support
• 1.1434 has switched to a resistance role after losses by EUR/USD on Wednesday
• Current range: 1.1300 to 1.1434

Further levels in both directions:

• Below: 1.1300, 1.1190 and 1.1094
• Above: 1.1434, 1.1553, 1.1611 and 1.1735

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