The Euro: the rise of the dollar and the Italian factor preventing the strengthening of

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On Monday, the pressure on the single currency weakened slightly, and quotes EURUSD was able to rise slightly above the 1.16 level, although the overall picture remains bearish, the risks and update the lows of mid-September, remain high.
The main bearish factor for the single currency remains the situation with the Italian budget in the context of the reaction of Brussels to the project, which envisages a deficit exceeding EU standards. In addition, as the deterioration increases the risk that at the end of October, the international agencies can lower the rating of Italy, which is the third largest economy in the Eurozone.
Have not added optimism and the current European data. In September, the final index of business activity in the manufacturing sector in the region fell to 2-year low at the level of 53.2 against the preliminary estimate of 53.3. Moreover, export orders plummeted to a 5-year low, pointing to a slowdown in economic activity in the Euro zone.
Add to that a strengthening of the dollar after confirming the fed’s intention to continue tightening policy before the end of this year and 2019, and further weakening of the Euro seems quite appropriate. So, after testing the level of 1.1570, the pair will aim at the 1.1550 area. Another risk factor for the couple – the Friday statistics on the us labor market.
Michael Mashchenko,
Analyst social network for investors
eToro in Russia and the CIS