The rally in EUR / USD stops at 1.1610; the pair returns below 1.1600
- The euro remains capped below 1.1600, close to long-term lows at 1.1525.
- Bitter market sentiment weighed on the euro’s attempt to recover.
- EUR / USD saw its decline extend to 1.1400 – Scotiabank.
The common currency tried to recover from the low of 1.1575 touched earlier Monday, before failing at 1.1610 and returning to levels below 1.1600. From a broader perspective, EUR / USD remains unable to return above 1.1600 and moves away from the year-to-date level of 1.1525 reached last week.
Risk aversion weighs on the euro
The risky market mood seen on Monday, with major European stock indexes in the red and Wall Street mixed, weighed on attempts to raise the Eurodollar. Re-emerging inflationary fears, combined with unfavorable macroeconomic data from China, dampened appetite for risky currencies.
China’s third-quarter GDP disappointed earlier today, posting 4.9% growth and missing expectations of a 5.2% increase. Beyond that, industrial production rose 3.1%, against market expectations of a reading of 4.5%. The numbers heightened concerns about a slowing Chinese economy, hit by high inflation and supply chain disruptions, which could send shockwaves around the world.
In addition, the global rise in inflation continues to add negative pressure on the euro which has been one of the worst performances of the G10 in recent weeks. Soaring energy prices have pushed consumer inflation to 13-year highs in the eurozone and threatens to derail the post-pandemic recovery.
EUR / USD: Expected to Extend Losses Towards 1.1400 – Scotiabank
According to the Scotiabank currency analysis team, the technical picture of EUR / USD suggests a further decline towards 1.1400: technical indicators continue to point to the possibility of EUR / USD losses will extend to the near term (2-4 week) low of 1.14 while medium term indicators suggest losses in the 1.11 area. “