Euro Has No Chance Against the Dollar |Daily Market Analysis

Key events:

Eurozone - EU Leaders Summit 

USA - Nonfarm Payrolls (Sep)  

USA - Unemployment Rate (Sep)  

Canada - Employment Change (Sep)

The European currency is slightly rising against the U.S. dollar during Thursday's session and is quoted near 0.9800. The pair EUR/USD is showing an upward trend after an active decline the day before, as a result of which the euro has renewed the local minimum at 0.9832.

It should be noted that the general fundamental background is still on the side of the sellers. According to the index of business activity in the service sector in the Eurozone decreased from 49.8 points to 48.8 points, while the composite index declined from 48.9 to 48.1 points.

The situation is much worse in Germany, where the index of activity in the service sector adjusted from 47.7 points to 45 points, and the composite from 46.9 points to 45.7 points.

A rapid slowdown of business activity in the leading sectors of the economy combined with the continuing growth of inflation does not leave much hope that the EU economy will be able to avoid recession in the near future.

German August trade data published today also had a mixed effect on sentiment with German exports rising 1.6% after a similar 1.6% decline in July but imports rising 3.4%, well above the 1.1% forecast. As a result, the trade surplus dropped from €3.4 billion to €1.2 billion.

Rising prices on energy markets and the consequent negative impact on the euro are still limited. However, there is a significant risk to the exchange rate if the upward trend in energy prices continues.

The dollar also continues to put pressure on the euro. On Wednesday the U.S. economic data came out better than expected, which contributed to the widespread strengthening of the U.S. currency. According to ADP, private sector employment rose by 208,000 in September, above market expectations of 200,000. ISM Services PMI was 56.7, versus a forecast of 56.

Further behavior of the dollar, as well as the European currency, will depend on today's report on the U.S. labor market - Non-Farm Payrolls, which will be released at 12:30 GMT. If the report does not disappoint, EUR/USD may end the week below 0.9800.