- EUR/USD, European Central Bank, Euro-zone Inflation, Covid-19
- Asian stock markets edged lower as an absence of US fiscal stimulus dragged on market sentiment.
- The Euro could be driven by inflation data.
- EUR/USD failed to break above key resistance so could extend losses.
Stock markets declined in the Asian session, Australia’s ASX 200 index fell0.54% and Japan’s Nikkei 225 index dipped 1.4%.
The safe haven- US Dollar and Japanese Yen extended gains versus major peers as the stalled Congressional stimulus talks dragged on market sentiment.
Gold & silver declined over 0.5%, as yields on US 10-year Treasuries ticked lower.
US retail sales and industrial production numbers for September are in focus together with Eurozone inflation.
Upcoming Inflation Data Could Sway ECB
The selloff could gain momentum in the coming days should Euro-area inflation data remain anaemic. Consumer prices are expected to drop to -0.3%. Meanwhile core inflation is due to drop to a record low of 0.2%.
Some recent weakness in consumer prices could be accounted for by a delay in summer sales and marked decline in energy prices.
Stagnant inflation could fuel bets that the European Central Bank will ease monetary policy further.
Several members of the Governing Council have made the case “for keeping a “ free hand”.
Therefore, disappointing headline and core inflation prints could boost the need for additional support from the ECB and drag on the euro.