The euro fell against the greenback yesterday following the release of weak German industrial production data for August and an almost flat Sentix investor confidence index for October. The unexpected conflict between Israel and Hamas in the Middle East has also fueled the selling of the Euro against the greenback, which is considered a haven currency. There were no other major economic releases yesterday. Overall, the EUR/USD pair declined from a high of 1.0578 to a low of 1.0523 in the past 24 hours.
According to Destatis, German industrial production inched down 0.20% m-o-m in August following a decline of 0.60% in July and missed forecasts of a 0.10% decrease.
Furthermore, Germany’s industrial production fell by 1.90% in the period between June and August, compared with the previous three months.
The construction sector decreased by 2.40% m-o-m in August. Likewise, energy production plunged 6.60% in the same period. Notably, machinery and equipment fell by 2.30%m-o-m in August.
On the other hand, the automotive sector rebounded with a growth of 7.60% m-o-m in August, following a 9.40% decline in July. Similarly, production in industry, excluding energy and construction, rose by 0.50%m-o-m in August. The production of capital goods and intermediate goods inched up 1.30% and 0.50%, respectively. Furthermore, the production of consumer goods decreased by 1.40% in August.
On a y-o-y basis, German industrial production declined 2% in August 2023. Excluding energy and construction, production in industry inched down by 0.70%y-o-y in August 2023. Additionally, production in energy-intensive industrial branches inched up 0.90%y-o-y in August 2023.
The Eurozone Sentix Investor Confidence Index inched lower to -21.90 in October from -21.50 in September but bettered forecasts of -24. The current situation index worsened to -27, reflecting the lowest level since November 2022, from -22. However, the expectations index improved to -16.80 in October, reflecting the highest level since April 2023, from -21 in September.
In the United States, the Sentix Investor Confidence Index saw a drop to 0.80 in October from 2.20 in September. Likewise, the current situation index decreased to 11.80 from 14, while the expectation index also worsened, falling to -9.50 from -9.
In Asia, excluding Japan, the Sentix Investor Confidence Index inched lower to 0.70 from 0.90. The current situation index rose to 1 from 0.30. Additionally, the expectation index decreased to 0.50 from 1.50.
The weak European economic data and unexpected conflict in the Middle East are expected to keep the EUR/USD pair range-bound with a slight bearish bias in the short term.
The historical price chart indicates that the EUR/USD pair is declining after facing resistance at 1.0605. The next support is anticipated to be only near 1.0215. Additionally, the currency pair is trading below its 50-day moving average, while the stochastic indicator is in the bearish zone. Therefore, we anticipate the EUR/USD pair to remain in a downtrend in the near term.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
