- EUR/USD slides amid Eurozone growth concerns and increased ECB easing calls.
- US Dollar Index hits fresh highs amid US-China trade war-led risk-off
- EUR: Downside looks more compelling amid US Labor Day holiday.
EUR/USD extends the losing-streak into a sixth straight day on Monday, having renewed two-year lows at 1.0957 last minutes.
EUR/USD: Bears now target May 2017 lows at 1.0840
After a brief consolidative stint just under the 1.10 handle, the spot came under fresh selling pressure in the European trading after the final Euro area Manufacturing PMIs showed that the Eurozone’s manufacturing recession continued for a seventh month in August.
Worsening Eurozone economic growth outlook, in the face of the US-China trade escalation and growing Brexit uncertainty, heightened the pressure on the European Central Bank (ECB), which meets next week, to resort to aggressive easing. This is reflected by Eurozone money markets, which now price in a 60% chance a 20-bps Sept ECB rate cut versus a 10-bps rate cut previously expected.
Meanwhile, on the Italian political scenario, Italian 5-Star Movement and Democratic Party tried their best over the weekend to hammer out a deal on a common agenda and Cabinet posts. However, that seems to keep the shared currency uninspired, as risks of a fallout still persist until anything concrete is decided on Wednesday.
Further, broad-based US dollar strength also collaborates the recent declines in the EUR/USD pair. The greenback continues to benefit from the growth differential, as the US economy remains in better shape when compared to the Eurozone.
Looking ahead, the pair risks further downside and the US Labor Day induced thin-trading could only exaggerate the moves. All eyes will also stay focussed on any new updates on the US-China trade front.
EUR/USD Technical levels to consider
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