On Thursday (October 30) during the New York session, the US dollar index and US Treasury bonds launched a surprise attack, causing the euro to fall rapidly against the dollar, dropping from flat to -0.45% at one point. This was likely due to the Federal Reserve's warning of the end of its quantitative easing program, which led to a rapid sell-off of US Treasury bonds. Safe-haven funds sought the dollar as an alternative, causing the dollar index to surge and putting pressure on the euro. Later, the European Central Bank announced its interest rate decision, maintaining rates unchanged for the third time. Benefiting from this positive news, the euro's decline against the dollar narrowed, currently trading around 1.1564, with the decline reduced to 0.31%.



Market attention has now shifted to the European market, with several key economic data points dominating short-term market sentiment. Germany's preliminary Q3 GDP figure was flat quarter-on-quarter (0.0%), compared to a previous reading of -0.3%. This data indicates that the German economy is stagnating, and two consecutive quarters of declining output is a common definition of a recession. Italy also turned to zero growth after contracting by 0.1% in Q2.

However, the weak growth results were insufficient to prompt the European Central Bank to cut interest rates. The ECB's hands-off stance contrasts sharply with the Federal Reserve, which cut its benchmark interest rate by a quarter of a percentage point early Thursday morning and is struggling with whether to cut rates again before the end of the year.

Regarding price data, Germany's preliminary CPI for the third quarter remained stable at 0.2% quarter-on-quarter, while Spain's preliminary CPI for the third quarter fell to 2.9%, slightly lower than the previous value of 3.0%, indicating a moderate easing of inflationary pressures in some parts of the Eurozone.

The European Central Bank will keep its main refinancing rate unchanged at 2.15%. Investors are currently focused on President Christine Lagarde's press conference, trying to glean potential clues about future easing policies.

The preliminary core CPI for the Eurozone, to be released on Friday, is expected to be 2.3%, slightly lower than the previous value of 2.4%; the overall CPI is expected to slow from 2.2% to 2.1%. This series of expected data indicates that the overall inflation level in the Eurozone is gradually moving closer to the central bank's target. However, Germany's October CPI broke expectations first, with the market forecast of 2.2% and the actual figure released by Germany being 2.3%.

This also leaves the core CPI figures for the Eurozone, which are set to be released on Friday, uncertain.

Technical Analysis:

The euro traded against the US dollar throughout the day with a pattern of rising, falling, and then rebounding. The daily chart shows that after breaking below the upward trend line, the euro retested the upward trend line and continued to fall, breaking below the important level of 1.1600. However, the positive aspect for the euro is that it did not break below the previous low of 1.1541, and the decline narrowed instantly following the European Central Bank's interest rate decision. Currently, the euro is expected to shift from a moderate upward trend to a range-bound trading pattern.


(Euro/USD daily chart, source: FX678)

At 21:44 Beijing time, the euro was trading at 1.1575/76 against the US dollar.