The euro dropped against the U.S. dollar on Wednesday, after upbeat U.S. new home sales data and as comments by European Central Bank President Mario Draghi coupled with downbeat data from Germany weighed broadly on the single currency. Official data showed that U.S. new home sales data rose 18.0% last month to 504,000 units, beating expectations for a 4.4% gain to 430,000 units. New home sales for July were revised to 1.9% increase from a previously estimated 2.4% drop. The strong data added to expectations that the Federal Reserve will hike interest rates sooner than markets are expecting.
Meanwhile, the Euro currency also remained under pressure as data on Wednesday showed that Germany’s Ifo business confidence index deteriorated for the fifth successive month in September. The Ifo economic institute’s business climate index fell to 104.7 from 106.3 in August. It was the lowest level since April 2013 and much weaker than economists’ forecasts for 105.7.
The data added to fears that the euro zone’s largest economy is losing momentum.
Intraday bias remains on the downside as 21 and 55 EMA trend indicators are crossed downward in the 1 hour charts, 4 hours, Daily and Weekly charts signalling a continuation of strong bearish trend in the pair. SSRC, Stochastic, RSI and MACD Oscillator indicators are showing bearish momentum is still intact, so am expecting further decline to 1.27092 supports (Weekly S2) in the medium term picture.
Tomorrow investors would be taking a close look on the USD Core Durable Goods Order and Unemployment Claims.