EUR/USD Fluctuations Continue

EUR/USD retraced back to 1.4200 level today after some very disappointing housing data came out in U.S. Overall situation continues to remain uncertain with the EUR/USD ranging between 1.4050 and 1.4250. It now formed a clear plateau pattern on the daily chart marking some major break in the Euro vs. Dollar struggle.

Housing report for September showed a further downfall in this economics sector with the decrease in both housing starts and building permits numbers exceeding pessimistic market forecasts. There were 1,191k housing starts (against 1,285k expected) and 1,226k new building permits (against 1,300k expected) this September.

Contrary to real estate sector bad news September CPI report showed a better than expected value - 0.3% against 0.2% expected, and that's from the -0.1% in August.

Crude oil inventories report for the October 8-12 week showed a major increase in commercial oil inventories - 1.8 million barrels, which can easily compensate for the previous decrease by 1.67 million barrels.

bad-fundamentals-good-for-usd

While dollar continued to rebound its weak positions today after EUR/USD failing to break 1.4180 resistance, fundamental stats from United States again came out below expectations. And again this caused a dollar rally against the Euro currency. ISM report on business activity for September 2007 showed a decrease by 1% - from 55.8% to 54.8% - well below the pessimistic expectation of 55.0%. After this report dollar went high to its weekly minimum at 1.4130 and now continues to gain strength.

One fundamental news that helped dollar and wasn't negative is the increase of the commercial crude oil inventories by 1.2 million barrels last week. This is logical, since when commodity prices are decreasing, currency gain value. As to the reaction on ISM services index - bad fundamental data now scare stock market investors away, thus making them to cash out into dollars (giving it more demand).