Euro Edges Lower Following Soft Construction Output

The Euro lost ground to the greenback in the wake of the weaker than expected EU construction spending and the stronger than expected Chinese GDP take which removed some of the expectation that the PBOC would further reduce interest rates. The exchange rate soared last week to a high of 1.1495, but was unable to take out the August highs at 1.17.

Eurozone construction output fell -0.2% month over month in August, after rising 0.4% month over month in July. Building dropped -0.2% month over month and civil engineering -0.3% month over month,

China’s Q3 GDP grew 6.9% year over year following the 7.0% year over year pace in Q2. The growth pace in Q3 was slightly firmer than expected, as analysts were looking for a growth rate of 6.6%. The 6.9% pace is the slowest since Q1 of 2009’s 6.2% growth rate. GDP grew 1.8% in Q3, as expected, following a upwardly revised 1.8% pace in Q2.

Support on the EUR/USD currency pair is seen near the 20-day moving average at 1.1266, while resistance is seen near last week’s highs at 1.1495. Momentum is poised to turn negative as the MACD inches toward a sell signal. This occurs as the spread (the 12-day moving average minus the 26-day moving average) crosses below the 9-day moving average of the spread.

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