Published on 29.11.2022 16:31

The Euro is currently declining against the US dollar after having climbed toward 1.0400 earlier in the day and dropped into negative territory below 1.0350. The technical picture points to a buildup of bearish momentum but the pair's downside could remain limited in case risk flows start to dominate the financial markets in the American session.

Earlier in the day, the data from Germany showed that the annual Consumer Price Index (CPI) declined to 10% in November from 10.4% in October. Similarly, CPI in Spain declined by 0.5% on a monthly basis in November, bringing the annual rate down to 6.8% from 7.3%.

Soft inflation readings from major European economies, which could allow the European Central Bank to lift interest rates by 50 basis points at next month’s meeting instead of the expected 75 basis points is making it difficult for the Euro to gather any momentum.

All eyes will now be on the American session and the Conference Board will release the Consumer Confidence Index data for November and investors will keep a close eye on the performance of Wall Street's main indexes. In case US stocks turn south following the opening bell, EUR/USD could continue to decline.

The ongoing protests in China are also not helping the Euro’s cause and the longer the protests continue, the more support will be had for the US dollar as a safe haven asset.

It's worth noting that China's National Health Commission announced earlier in the day that they will strengthen vaccination for the elderly. This decision is assessed as a sign that China could continue to move away from its zero-Covid policy. Hence, the market mood could improve later in the day and help EUR/USD edge higher.


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