EUR/USD plunges to new 10-month low

The US dollar extended its bullish run on Wednesday, rallying in response to some upbeat US data.

Meanwhile, the pound is struggling to attract support this morning, with GBP/EUR flat at €1.1553 and GBP/USD muted at $1.2130. GBP/CAD is subdued at CA$1.6368, while GBP/AUD and GBP/NZD retreat to AU$1.9031 and NZ$2.0413, respectively.

Coming up, will a slump in German inflation drag the euro lower again today?

What’s been happening?

The US dollar strengthened through yesterday’s session on the back of the latest US durable goods orders release.

August’s data reported a 0.2% rise in goods orders, a notable rebound from July’s 5.6% decline and beating forecasts of another contraction.

Also bolstering demand for the US dollar was a prevailing risk-off mood, with concerns over a potential US government shutdown underpinning the appeal of the safe-haven currency.

The euro’s strong negative correlation with the US dollar resulted in EUR exchange rates coming under notable pressure, which was not helped by concerns over the Eurozone’s slowing economy.

At the same time, the pound remained on the defensive, amid UK recession fears and fading Bank of England (BoE) interest rate hike expectations.

What’s coming up?

Centre stage today will be the publication of Germany’s consumer price index. September’s preliminary CPI figures are expected to report headline inflation fell from 6.1% to just 4.6%. Could this weaken European Central Bank (ECB) interest rate expectations and pull the euro lower this afternoon?

In the meantime, the release of the Eurozone’s latest economic sentiment index could weigh on EUR exchange rates this morning, as morale is forecast to have deteriorated again this month.

On the other side of the Atlantic, the US will publish its finalised GDP figures for the second quarter. Expect to see the US dollar face some resistance if growth is revised lower again.

Also of note to USD investors will be last week’s initial jobless claims, in which another low print could reflect positively on the ‘greenback’.

Finally, the absence of any GBP data of note could see the pound continue to run afoul of the UK’s gloomy economic outlook.