Euro edges lower as German Industrial Production declines

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<li>German Industrial Production declines</li>
<li>Fed&#8217;s Powell will make public remarks on Wednesday</li>
</ul>
<p>The euro is in negative territory for a second straight day. In Tuesday&#8217;s North American session, EUR/USD is trading at 1.0684, down 0.31%.</p>
<p><strong>German Industrial Production declines 1.4%</strong></p>
<p>Germany&#8217;s industrial production slipped 1.4% m/m in September, following a downwardly revised -0.1% reading in August and well shy of the market consensus of -0.1%. This marked a fourth straight decline in industrial production and is another sign of weakness in the eurozone&#8217;s largest economy.</p>
<p>German data has been soft across the economy. Retail sales fell 0.8% in September, which was a fourth straight decline. The services sector has seen growth steadily weaken, while manufacturing has been in contraction for some fifteen months. The economy is sputtering and one analyst is calling Germany&#8217;s grim economic picture a &#8220;macro horror show&#8221;. There is a strong likelihood that Germany will end the year in recession, as the former economic locomotive has become the &#8216;sick man of Europe&#8217;.</p>
<p>The euro has been on a prolonged decline since July, falling as much as 9.5% in that period. Last week, the euro managed to rebound, as a soft US nonfarm payrolls report sent the US dollar sharply lower against the majors. Still, the US economy remains in good shape and the euro is likely to face further headwinds with the eurozone grappling with high inflation and weak growth.</p>
<p>The markets believe that the Federal Reserve is done with tightening, barring any nasty surprises from economic data. The Fed is widely expected to hold rates at the December meeting, and the markets will be sniffing for signs of a rate cut in 2024, even though the Fed has been sticking to its script of &#8220;higher for longer&#8221; regarding rate policy. The US economy has managed to avoid a recession this year and a soft landing in 2024 is certainly possible, although by no means a given. We&#8217;ll hear from Fed Chair Powell on Wednesday and investors will be looking for some clues about future rate policy.</p>
<p>.</p>
<p><strong>EUR/USD Technical</strong></p>
<ul>
<li>There is resistance at 1.0730 and 1.0813</li>
<li>EUR/USD tested support at 1.0665 earlier. Below, there is support at 1.0583</li>
</ul>
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