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EUR/USD slightly changed, off eight-month highs

dolar_euro_pound_yenThe euro traded steadily against the US dollar on Wednesday, as US budget concerns continued, but the greenback seemed to be still supported after the strong manufacturing data, released by the ISM yesterday.

EUR/USD fell to a session low at 1.3507 at 1:50 GMT, after which consolidation followed at 1.3520, decreasing 0.04% for the day. Support was likely to be received at September 26th low, 1.3470, while resistance was to be met at October 1st high and also an eight-month high, 1.3587.

Demand for the euro was pressured as Italian Prime Minister Letta’s government will face a confidence vote today, after former premier Silvio Berlusconi decided to withdraw his support last week. “Even if the government survives, which looks more likely following yesterday’s news and rumors, political uncertainty would remain,” Frederik Ducrozet, an economist at Credit Agricole CIB in Paris, wrote in research dated today, cited by Bloomberg. This could “limit the upside” for market sentiment.

Additionally, the European Central Bank policymakers, holding a meeting in Paris, are expected to keep the benchmark interest rate unchanged at a record low level of 0.5%, according to all 52 economists, participated in a survey by Bloomberg News. President Mario Draghi will attend a press conference after the policy meeting, as during his speeches market volatility is usually high.

Also, today it became clear that the number of unemployed people in Spain rose more than projected in September, reaching 25 572 instead of 12 300, while a month ago the number decreased by 31. The total number of unemployed in the country rose to over 4.7 million people. On annual basis, unemployed increased 0.41%. Despite the strong rate of increase, however, this change in the number of unemployed was the least since June 2007.

Meanwhile, the US dollar came also under pressure, as concerns appeared that the first government shutdown in 17 years may pose a threat to economic recovery and this could urge the Federal Reserve Bank to maintain the pace of its monetary stimulus for a longer period than expected. Treasury Secretary Jacob Lew urged the US Congress to extend country’s borrowing authority “immediately,” in a letter addressed to House Speaker John Boehner yesterday. According to Lew, the United States has begun using the final extraordinary measures to prevent a breach of the debt ceiling, as he again said that measures might be exhausted no later than October 17th.

However, the greenback managed to distance from its lowest point in eight months against the common currency, after the Institute for Supply Management (ISM) said on Tuesday that its manufacturing PMI advanced to a value of 56.2 in the month of September, marking its highest level during 2013, as the index stood at 55.7 in August.

Elsewhere, the euro was steady against the sterling, as EUR/GBP cross dipped a mere 0.02% to trade at 0.8351 at 8:16 GMT. EUR/JPY pair was falling 0.53% on a daily basis to trade at 131.87 at 8:17 GMT. is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover Forex, Price Action and Social Trading.

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