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EUR/USD turns negative on the day and drops below 1.1600 for the second straight day on risk-off mood as investors wait for NVIDIA earnings, and digest US labor market data, orders ahead of Thursday’s Nonfarm Payrolls report. The pair trades at 1.1586, down 0.04%.

Euro dips for a second day as Wall Street jitters, stronger Dollar, and US data weigh on sentiment before NVIDIA earnings

Speculation of a possible AI bubble is taking its toll on Wall Street, with equities turning south. US data revealed the first print of jobless claims since the government shutdown, with investors also eyeing the Federal Open Market Committee (FOMC) latest meeting minutes.

During the last two weeks, Fed officials had struck hawkish comments, but recent data had risen the chances of a 25-basis points rate cut at the December meeting. However, a strong Nonfarm Payrolls report on Thursday, could trigger a repricing for further easing, next month.

The Euro is also pressured by the Dollar’s strength. The US Dollar Index (DXY) which tracks the performance of American currency against other six is up 0.04% at 99.57.

In Europe, Tuesday’s docket is absent. On Wednesday, inflation for the Eurozone is expected to remain unchanged by economists, with the Harmonized Index of Consumer Prices (HICP) and core HICP to remain near the European Central Bank (ECB) 2% target.

Daily market movers: EUR/USD drops amid mixed US data

• The US economic docket featured Initial Jobless Claims for the week ending October 18, came at 232,000, revealed the Department of Labor. The Commerce Department featured Factory Orders for August, which increased by 1.4% aligned with estimates up from July’s -1.3% decline.
• Richmond Fed President Thomas Barkin said the Fed’s dual mandate is “in balance,” citing upside risks to inflation and downside risks to the labor market. He stressed that the absence of official economic data complicates policymakers’ ability to assess where the Fed currently stands.
• Fed Governor Christopher Waller struck a more dovish tone, describing the labor market as “weak.” He added that inflation expectations remain well anchored and noted that core inflation is now close to the Fed’s 2% target.
• According to the CME FedWatch Tool, markets now assign a 50% probability to a rate cut at the December meeting — up from 46% earlier in the day, but still below the 67% likelihood seen last week.
• In Europe, the HICP for October is expected to rise to 2.1% YoY unchanged and monthly, 0.2%, up from 0.1%. Core HICP is expected to remain unchanged at 2.4% YoY.

EUR/USD technical outlook: Tumbles below 1.1600, traders eye 1.1550

EUR/USD tumbled for the third straight day, clearing the 20-day Simple Moving Average (SMA) at 1.1580 opening the door for further downside. A breach beyond 1.1550 will expose 1.1500. Conversely, if EUR/USD rises past 1.1600 the shared currency might remain trapped within the 1.1600-1.1650 range. A breach of the latter will expose the 100-day SMA at 1.1659.

(Click on image to enlarge)

EUR/USD daily chart

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