EUR/USD – Euro slides as Italy approves controversial budget

EUR/USD is down slightly in the Friday session, after sharp losses on Thursday. Currently, the pair is trading at 1.1622, down 0.16% on the day. In economic news, German unemployment change plunged by 23 thousand, easily beating the estimate of -9 thousand. In the eurozone, inflation indicators missed their estimates. CPI Flash Estimate edged higher to 2.1%, matching the forecast. CPI Core Flash Estimate ticked lower to 0.9%, shy of the estimate of 1.1%. In the U.S, the focus is on consumer reports. Personal Spending is expected to edge lower to 0.3%, while UoM Consumer Sentiment is expected to climb to 100.5 points. The indicator last broke through the symbolic 100 level in March.

The euro took a tumble on Thursday, slipping 0.8 percent. Investors reacted negatively after the Italian government approved a controversial budget, which aims for a budget deficit in 2019 of 2.4% of GDP. This number could move higher as the budget is debated in parliament. Although EU guidelines allow a deficit of 3%, Brussels will be nervously following the budget. The markets were hoping that Italy’s budget deficit would be around 2%, and Brussels will be nervously following the budget. As well, investors could lose confidence in Italian government bonds and this negative sentiment could continue to weigh on the euro.

As widely expected, the Federal Reserve pressed that rate trigger for the third time this year, raising the benchmark rate by a quarter-point, to a range of 2 percent to 2.25 percent. The Fed intends to continue gradually raising rates, with another rate hike expected in December and three hikes in 2019. What was of more interest to investors was the rate statement, in which the Fed removed the word ‘accommodative’ in the statement, which means that the Fed now considers monetary policy to be neutral. Fed Chair Jerome Powell, in a bid to keep markets calm, stated in a follow-up press conference that removing accommodative language in the statement did not reflect a change in policy. Still, the markets were upbeat after the Fed meeting and the U.S dollar has responded with slight gains against the euro on Thursday.

OANDA Trading Asia market update JPY and EUR in focus

Still picking up the FOMC pieces and tying up a few loose ends

EUR/USD Fundamentals

Friday (September 28)

• 2:45 French Consumer Spending. Estimate 0.3%. Actual 0.8%
• 2:45 French Preliminary CPI. Estimate -0.1%. Actual -0.2%
• 3:00 Spanish Flash CPI. Estimate 2.2%. Actual 2.2%
• 3:55 German Unemployment Change. Estimate -9K. Actual -23K
• 5:00 Eurozone CPI Flash Estimate. Estimate 2.1%. Actual 2.1%
• 5:00 Eurozone Core CPI Flash Estimate. Estimate 1.1%. Actual 0.9%
• 5:00 Italian Preliminary CPI. Estimate -0.2%. Actual -0.4%
• 8:30 US Core PCE Price Index. Estimate 0.1%
• 8:30 US Personal Spending. Estimate 0.3%
• 8:30 US Personal Income. Estimate 0.4%
• 9:45 US Chicago PMI. Estimate 62.3
• 10:00 US Revised UoM Consumer Sentiment. Estimate 100.5
• 10:00 US Revised UoM Inflation Expectations

*All release times are DST

*Key events are in bold

EUR/USD for Friday, September 28, 2018

EUR/USD for September 28 at 4:35 DST

Open: 1.1641 High: 1.1615 Low: 1.1613 Close: 1.1622

EUR/USD Technical

EUR/USD continues to break below support levels. The pair ticked higher in the Asian session but has edged lower in European trade

• 1.1637 is providing support
• 1.1718 has switched to a resistance role after losses in the Thursday session

Further levels in both directions:

• Below: 1.1553, 1.1434 and 1.1300
• Above: 1.1637, 1.1718, 1.1840 and 1.1961
• Current range: 1.1553 to 1.1637

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