Forex - EUR/USD edges lower on profit taking

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Investing.com - The euro edged lower against the U.S. dollar in subdued trade on Friday, as investors locked in profits after the single currency rallied to eight-month highs against the greenback due to the current U.S. government shutdown.

EUR/USD hit 1.3583 during European afternoon trade, the session low; the pair subsequently consolidated at 1.3593, slipping 0.18%.

The pair was likely to find support at 1.3506, the low of October 2 and resistance at 1.3658, the high of February 4.

The dollar remained under broad selling pressure as investors continued to weigh the implications of a protracted U.S. government shutdown.

On Thursday, disappointing U.S. service sector data added to concerns that the shutdown in Washington could have wider consequences on the U.S. economy.

The Institute of Supply Management said its non-manufacturing purchasing manager's index fell to a three-month low of 54.4 in September from a reading of 58.6 in August. Analysts had expected the index to decline to 57.4 last month.

The U.S. Labor Department on Thursday said the employment report for September will not be released as scheduled on Friday due to the government shutdown. It said a new release date had not been set.

Markets were also considering how the U.S. political deadlock will impact negotiations to raise the U.S. debt ceiling, which the U.S. Treasury Department has estimated will be reached by October 17.

Speaking overnight, International Monetary Fund head Christine Lagarde said the failure to raise the U.S. debt ceiling could hurt the global economy and warned U.S. growth could drop below 2% this year.

In the euro zone, official data earlier showed that German producer price inflation fell 0.1% in August, confounding expectations for a 0.1% rise, after a 0.1% slip the previous month.

The euro was higher against the pound with EUR/GBP gaining 0.49%, to hit 0.8470.


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This article appears in: Investing , Forex and Currencies

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