The recession alarm bells are ringing as loud as ever as the German economic downturn appears to be gathering pace and is taking shape much quicker than anticipated. Europe's largest economy appeared to have seen business activity shrinking in July and that is sending the euro reeling on the day.
EUR/USD has fallen to 1.0135 now with the charts pointing towards a test of the 200-hour moving average (blue line) at 1.0118 next. A break back below that is likely to add pressure towards a retest of parity after the ECB failed to really give euro bulls much to work with yesterday.
Elsewhere, risk is slumping a fair bit more on the session with European indices trading lower and S&P 500 futures now down 20 points, or 0.5%, near the lows for the day. This comes as bond yields are also looking heavy with 10-year German bund yields sliding by nearly 13 bps to 1.09%.
The mood is underpinning the dollar on the session with the greenback pushing to fresh highs on the day against the likes of the pound, loonie, aussie and kiwi as well.
This article was written by Justin Low at www.forexlive.com.
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