The EUR/USD is trading just below 1.1700, marginally higher on the day. ECB member Ewald Nowotny said that Italy’s issues would not stop his institution from raising rates. The shrugging off of Italian woes contrasts the tones from EU Commissioner Oettinger which warned Italy about budget payments.
Also, credit rating agency Fitch is due to provide an update on Italy’s rating after European markets close. A downgrade or a warning is possible. Italy is considering breaching EU budgetary rules.
Concern also grows about the US intentions to impose tariffs on $200 billion worth of Chinese goods. US President Donald Trump said late on Thursday that he wants these duties to be imposed “as soon as possible,” bringing the issue to the forefront.
Another source of worry is the plunge in some currencies of Emerging Markets. The Argentinian Peso took a dive of 20% against the US Dollar at some point on Thursday. The Indonesian Rupiah fell to a 20-year low, while the Turkish Lira remains under pressure.
The euro-zone will publish preliminary inflation figures for August at 9:00 GMT. July saw prices rising by 2.1% on the headline and 1.1% on the core. The same levels are projected now.
End of month flows and a long weekend in the US imply choppy trading towards the end of the day. Headlines from Trump and news related to Emerging Markets may have their say.
EUR/USD Technical Analysis
The EUR/USD is trading in a downtrend channel in the past few days and is closer to the upper end at the time of writing. The Relative Strength Index is balanced, and Momentum is lacking.
Support is found at 1.1640, the low point on Thursday. It is firmly backed up by the Simple Moving Average on the four-hour chart. Further down, 1.1595 support the pair early in the week. Lower, we find 1.1530 that served as support last week.
