Euro Drops to 2-Month Lows on Weak PMI Data Amid Italian Politics

The euro today tumbled to new lows against the US dollar due to the current impasse between the European Union and Italy regarding the country’s 2019 budget. The euro was further weighed down by the disappointing PMI data from across the euro area released by Markit Economics earlier today, which indicated an economic slowdown in the region.
The EUR/USD currency pair today fell from a high of 1.1476 to a low of 1.3925 and was trading slightly above its lows at the time of writing.
The currency pair opened today’s session on a slight downtrend before plunging to new lows in the early European session following the PMI releases. The Markit Flash Germany Manufacturing PMI for October missed expectations by coming in at 52.3 versus the expected 53.4 print. The Markit Germany Services PMI also came in at 53.6, which was lower than the consensus estimate of 55.5. The Markit Flash Eurozone Manufacturing PMI also disappointed by coming in at 52.1, which was lower than the expected print of 53.0. The Markit Eurozone Services PMI also missed consensus estimates. The disappointing PMI prints triggered the pair’s massive plunge.
The war of words between the European Union and Italy regarding yesterday’s rejection of the Italian budget by the EU also dragged the pair lower as Italy remains adamant in its plan to implement a 2.4% deficit in its 2019 budget.
The release of the US house price index and Markit US manufacturing and services PMIs are likely to influence the pair’s short-term performance.
The EUR/USD currency pair was trading at 1.1388 as at 12:11 GMT having dropped from a high of 1.1476. The EUR/JPY currency pair was trading at 128.38 having declined from a high of 129.21.

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