EUR/USD bears still in control

  • Regular
  • FX Market
  • 6 months ago
  • 124

EUR/USD under pressure in a risk-off environment while EZ & DE Nov PMIs see downside surprises, adding additional weight. 

EUR/USD hurt by falling  DE yields while perception that the ECB might be more cautious in December grows. 

While now below the 50% fibo of the November highs and lows, besides a resurgence in the greenback, the euro is feeling domestic political pressures that are weighing as well as poor economic data both of which are tipping the scales in the dove's favour when it comes to the ECB. The single unit was pressured on Friday after weaker German and EZ PMI data and fell from 1.1400 to 1.1345. 
EZ Q4 PMI pointed to a GDP growth of 0.3% while DE November Markit Mfg Flash PMI came in at 51.6 vs 52.2 forecasted and 52.2 previous. EZ Q4 PMI points to GDP growth of 0.3%. "Markit’s write-up highlighted the drop to four-year lows, weakness in export activity as well as lower order books and optimism leading to downside risks to future growth," analysts at Westpac explained.
Brexit poses a risk
On the political side, Brexit poses a risk which the euro is tracking the performance of sterling and developments there. PM May is scheduled to now take the deal to the UK Parliament, tentatively scheduled for mid-December, where she is expected to face strong opposition and her toughest challenge yet. However, on the Italian front, there was some optimism over the weekend when deputy PM Matteo Salvini hinted at a compromise. When asked whether the 2.4% number was set in stone, he explained to AdnKronos: "Nobody is fixated on this; if there's a budget that makes the country grow, it could be 2.2 percent or 2.6 percent." Looking ahead, markets will now see ECB president Draghi addressing the European Parliament in Brussels this week, with plenty to talk about.

Source : FX street