The euro continues to experience a downturn, primarily driven by the risk-off sentiment due to escalating conflicts in the Middle East. This has led investors to favor the dollar over the European currency, contributing to its weakening. The situation is further exacerbated by China’s disappointing Golden Week spending and a significant contraction in German industrial production, both of which have raised concerns about regional growth and added pressure on the euro.
The bleak economic outlook in Europe continues to weigh heavily on the local currency. Despite these challenges, ECB’s Knot expressed comfort with the current rates, aligning with projections made earlier this month to maintain these levels. His stance has done little to alleviate the downward pressure on the euro.
Adding to this complex financial landscape are anticipated speeches from Federal Reserve officials following last Friday’s Non-Farm Payrolls (NFP) print. These speeches are expected to provide hints about the upcoming US Consumer Price Index (CPI) report.
In terms of trading, the EUR/USD daily chart reveals a recent selloff of the euro, although it remains above the 1.0500 psychological handle. Resistance levels are currently at 1.0635 and 1.0600, while support levels sit at 1.0500 and 1.0443.
IG client sentiment data indicates a mixed position among traders, with 67% holding long positions on EUR/USD. This suggests that while some traders anticipate a recovery for the euro against the dollar, a significant portion remains cautious due to ongoing global uncertainties and regional economic concerns.