The Euro has received a boost early on in today’s European trading session after a round of solid economic figures from Germany adds evidence that the Eurozone economy is back on track after the devastating effects of the coronavirus.
The producer price index, a main indicator of business conditions from Germany, Europe’s largest economy hit the market today at 1.9 percent, more than double analysts’ expectations for a figure of 0.8, while the yearly figure also smashed expectations coming in at 10.4 against predictions for a number of 9.3.
The news has been enough to break a 4-day losing streak against the US dollar and with no major economic news due out from the US or Eurozone today, the key for the European currency to remain in positive territory today will related to the number of new coronavirus cases as well as the developments in Afghanistan.
Risk aversion is currently playing a big part in the currency markets as participants try to hedge their bets and any further escalations in either of these 2 situations will see traders flock back to the safety of the US dollar and may leave the Euro on track for its 5th straight day of losses.
Also hurting the Euro was the jobless claims figure released yesterday from the US which broadly hit the market in line with expectations and shows the US economy is continuing to recover strongly with employment growth on the rise in recent months. It leaves the Fed on track to begin tapering their bond buying program before the end of this year.
From a technical perspective, A sustained move below the $1.1675 level will indicate the presence of sellers and we may see a move down to the next resistance level of $1.1640. If this fails to hold and is taken out this could trigger an acceleration to the downside with the November 4 bottom at $1.1603 the next major target.