EURUSD Stretches the Decline As ECB Keeps the Pressure

EURUSD made a break of the 1.08 level this week, pushing below the 200 weekly SMA, with the ECB weighing on the price with their dovish remarks. Today sellers are pushing lower again, which points to 1.07 as the first target for EUR/USD sellers, with the USD continuing to remain in demand.

EUR/USD Chart H4 – The 20 SMA Pushing the Price Lower

ECB’s Philip Lane has conveyed a strong sense of confidence that disinflation is progressing as expected, though some recent data has raised questions about growth projections. He emphasized that a robust economic recovery remains a plausible scenario and stressed the importance of avoiding a steep economic downturn. ECB President Christine Lagarde also spoke on inflation, expressing satisfaction with the progress but warning that caution is still needed. While inflation trends are heading in the right direction, vigilance remains essential to prevent any setbacks.

Following the ECB’s most recent decision to lower interest rates, the usual post-policy approach seems to be one of waiting and watching. The central bank appears to be adopting a balanced stance, signaling that further moves will depend on evolving economic conditions. In the currency markets, despite a brief recovery, the EURUSD has struggled to break above the 1.08 level. Intraday traders have attempted to navigate the correction, but sellers continue to exert pressure, keeping the exchange rate below this key resistance point for now. The US existing Home Sales report was also release a while ago.

September US Existing Home Sales Report

  • September 2024 existing home sales: 3.84M vs. 3.86M expected (prior month revised to 3.88M)
  • Sales pace: Lowest since October 2010
  • Monthly change (MoM): -1.0% vs. -2.0% (revised from -2.5% last month)
  • Annual change (YoY): -3.5% vs. -4.2% YoY in the prior month (3.98M last year)
  • Inventory: 4.3 months vs. 4.2 months last month (3.4 months a year ago)
  • Inventory increase: +1.5% for September; total inventory 1.39M
  • Median price: $404,500, up 3% YoY (15th consecutive month of price increases)

Other details:

  • First-time buyers: 26% of sales, matching record low (down from 27% in September 2023)
  • All-cash sales: 30% of transactions (up from 26% in August, 29% in September 2023)
  • Individual investors/second-home buyers: 16% of sales (down from 19% in August, 18% in September 2023)
  • Distressed sales: 2%, unchanged from last month and last year
  • 30-year mortgage rate (Oct 17): 6.44%, up from 6.32% one week ago, down from 7.63% one year ago

Regional data:

  • Northeast: Sales fell 4.2% MoM, down 6.1% YoY to 460K; median price up 6% to $467,100
  • Midwest: Sales dropped 2.2% MoM, down 5.3% YoY to 900K; median price up 5% to $306,600
  • South: Sales decreased 1.7% MoM, down 5.5% YoY to 1.72M; median price up 0.8% to $359,700
  • West: Sales rose 4.1% MoM, up 5.6% YoY to 760K; median price up 1.7% to $616,400

Despite lower mortgage rates and more inventory, home sales remain sluggish, hovering around a four-million-unit pace. Factors like economic uncertainty ahead of the election may be causing buyers to hold off.

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Skerdian Meta
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Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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