EUR/USD Crashes To Two-Week Low Below 1.1300

  • EUR/USD is leaning lower within the range amid adverse developments.
  • Draghi’s dovish stance and concerns about China weigh.
  • The technical picture remains mixed as the pair clings to the range.

EUR/USD is trading in the lower half of the 1.1300 handle, marginally lower. European Central Bank President Mario Draghi said that the balance of risks is moving to the downside, sending the common currency lower. However, the world’s most popular currency pair never went too far.

The ECB also formally announced the end of its bond-buying scheme which ran for nearly four years and pledged to reinvest the proceeds from maturing bonds. The Frankfurt-based institution will maintain the 2.6 billion euros balance sheet well beyond the first increase of interest rates, according to the pledge.

Markit’s preliminary purchasing managers’ indices for France badly disappointed. The Manufacturing PMI fell to 49.7, the services PMI to 49.6. Scores below 50 reflect future contraction. The numbers are worrying.

China remains in the limelight of the global economy, but this time due to economic indicators rather than its trade spat with the US. Growth in industrial output slowed down to 5.4% YoY, and retail sales in the world’s second-largest economy decelerated to the lowest levels since 2003. The news weighs on markets and limits any potential gains for the euro.

Italy and the European Commission continue their negotiations over the Italian budget. The sides are reportedly getting closer, but a gap remains. Concerns about a broad French budget deficit have subsided.

The Brexit saga continues with European leaders rejecting a legally binding change in the Irish backstop, and they are willing only to add declarations. The Pound is on the back foot, but it is not affecting the Euro so far.

Later today, the US releases retail sales numbers for November. Consumption is central to the American economy, and the data feed into next week’s Fed decision.

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