Home EUR/USD Breaks Support on Horrible US Data
Forex News Today: Daily Trading News

EUR/USD Breaks Support on Horrible US Data

Euro/dollar extended its losses and fell below support as the US reported bad figures: the  Philly Fed Manufacturing Index plunged to -30.7 points – a very low point. Estimations were for a positive number. Existing home sales fell to a pace of 4.67 million, lower than 4.91 million expected.

The plunge in the Philly index very significant – it is the most recent data available – for the current month of August. The figure shows that manufacturers in the Philladelphia area expect economic conditions to deteriorate very quickly.

This joins a rise in jobless claims above 400K reported earlier. The Philly Fed Index stood on 3.2 points last month. It already dipped into negative territory 3 times in the past year, but this was only a single digit figure. The last time that the indicator was so low was back in March 2009 (when QE1 was launched). It then stood on -35 points. At the height of the financial crisis it passed the -40 point mark.

EUR/USD broke below the 1.4325 line and bounced off the next support line at 1.4282 for now. Further support is at 1.4220. Higher resistance is at 1.4375. For more on the pair, see the euro/dollar forecast.

The world is slowing down – slowing down so fast that it might enter a recession. Morgan Stanley lowered their forecasts for global growth. US treasury yields continue dropping as they are “safe haven” as well. They fell below 2%.

Stock markets are plunging once again and the franc and the yen strengthen, “enjoying” their safe have status and despite the efforts from both central banks to push their respective currencies lower.  USD/JPY and USD/CHF are now dropping, with dollar/yen too close to the critical 76.25 line.

The prospects of a global slowdown join the growing worries about European banks, which are leveraged at levels too close to Lehman.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.