Well, it is official. EUR/USD closed below parity yesterday as price fell to its lowest since 2002 and that likely paves the way for a steeper decline towards 0.9800 and potentially 0.9500 next. It's tough to pick at support areas now but key figure levels will be the best bet for buyers as they act as some form of psychological barrier.
It's tough to find any reasons whatsoever to be bullish on the euro and the worst part is that the headlines just keep getting worse. The staggering surge in energy prices to start the week adds to the woes on the outlook towards winter and today, we will be getting August flash PMI readings for France, Germany, and overall Eurozone.
The data is estimated to show a further decline in overall activity after a significant slump in July. That just brings forward the case of an imminent recession in the region with Q3 conditions set to reflect a contraction.
If there aren't any major surprises, we should see the data cement the euro's latest drop below parity against the dollar. And even in the case of any mild upside beat, I would fade any jump in price action as it doesn't really distract from the bleak outlook for the region heading into the winter months.
