The euro fell Wednesday as the latest batch of dismal data from the eurozone signals further deterioration of the currency region's economy. Traders are reluctant holding riskier positions ahead of the U.S. FOMC decision tonight.
Germany's business confidence continued to deteriorate and business conditions across manufacturing sector worsening in October, signaling the eurozone debt crisis effects spilling even over the biggies of the zone.
Reports citing survey results from Ifo Institute said Wednesday that the business climate index fell to 100 from 101.4 September. Economists were expecting a reading of 101.6. The index for current situation dropped to 107.3, and well below the consensus forecast of 110.
Business conditions across German manufacturing sector deteriorated further in October due to "sharp and accelerated" decrease in new orders, preliminary results of a survey by Markit Economics revealed today.
The purchasing managers' index for the manufacturing sector fell to 45.7 in October from 47.4 in September. A PMI reading below 50 suggests contraction. Economists expected the PMI to rise to 48. The manufacturing output index fell to 45.9 from 48.4 in the previous month.
Business activity in Eurozone private sector fell at the fastest pace in 40 months in October, in response to marked contraction in new order intakes, a survey by Markit Economics revealed today. The composite output index, that measures performance of both manufacturing and services sector, fell to 45.8 in October from 46.1 in September.
The purchasing managers' index for the manufacturing sector dropped to 45.3 from 46.1 in September. Expectations were for an increase to 46.5. The manufacturing output index fell to 44.8 from 45.9 in September.
The euro reached below the key 0.81 mark against the pound for the first time since October 16, falling as low as 0.8092 around 5:10 am ET, down 0.62 percent from yesterday's close of 0.8143. The pair has already met the supply level and is poised to extend its bear run till reaching the next major demand level around the 0.8050/55 area.
Bank of England Governor Mervyn King said the central bank is ready to add more stimulus if the recent positive signs in the economy fade. The recovery and rebalancing of the UK economy are proceeding at a slow and uncertain pace and at this stage, it is difficult to know whether the recent positive signs would persist, King said in a speech to the South Wales Chamber of Commerce on Tuesday.
Against the yen, the European shared currency reached a 9-day low of 1.2923 by 4:15 am ET, down almost 0.5 percent from its overnight closing quote of 1.2987. The next key levels to watch for the pair on the downside are 1.29, 1.2870 and 1.2810.
The single currency slipped to a weekly low of 103.0 against the yen, having retreated from the key supply zone above 104.50 hit yesterday. The pair has already broken the triangle resistance of 104.0 before staging the pullback. The next downside target for the currency cross is visible around the 102.50 area.
The common currency that climbed to a 2-week high of 1.2119 against the Swiss franc in the Asian trading reversed direction on disappointing data, falling as low as 1.2096 around 5:00 am ET.
The common currency also edged lower against the resource-linked currencies, falling to a 13-day low of 1.2538 against the Australian dollar, 8-day low of 1.5903 against the New Zealand dollar and a 6-day low of 1.2812 against the Canadian dollar.
The Australian dollar outperformed today after data showed the nation's consumer prices were stronger than predicted in the third quarter and the China Manufacturing PMI rose to a three-month high in October.
Looking ahead, the US house price index for August and new home sales for September are expected to influence the market in the New York morning session and the US FOMC rate decision in the afternoon trading.
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Forex News
May 22, 2026 14:46 ET Minutes of the latest Fed policy session was the highlight of the week along with survey data on the U.S. housing market. In Europe, survey data signaled the trends in the euro area private sector. Further, consumer price inflation data from the U.K. was in focus. In Asia, various economic indicators from China drew attention to the health of the economy.