EUR/USD - H1
Monetary policy differential, recent dovish remarks by the ECB president, hawkish comments from Fed officials and upbeat data from the United States, have put relentless pressure on the pair, which extended its losses today to the lowest levels since July 2020.
After Ms. Lagarde pushed against tightening on Monday, Fed's Bullard, doubled down on last week's hawkish comments, with yesterday's interview on Bloomberg.
The St. Louis Fed president, who is a voter next year, said that Core PCE Inflation is quite high and called for faster QE tapering to be concluded by Q1 next year and provide time to assess rate policy.
Along with higher Retails Sales and Industrial Production from the US in October, the Eurodollar took another beating yesterday and dropped further today, to breach key 1.1290 level as we had anticipated – albeit a little faster.
As we approach the European session, the US Dollar shows exhaustion and we need to see in what mood markets will open. Furthermore, Eurozone Consumer Price Index is due at 10:00 GMT, while a series of Fed officials and ECB's Ms. Lagarde are on tap later in the day.
The move is overextended and the Euro finds support following the new low (1.1262), returning back above 1.1290. As such, further rebound towards mid-1.1300s could be in the cards, but a catalyst and/or broader risk-on sentiment will be required for a larger recovery towards the EMA100 (1.1400-10).
A compelling factor to drive a sustained recovery seems to be elusive at this stage and the pair continues to trade in negative territory. The 1.1290 breach, has opened the door for further weakness towards 1.1240, but 1.1184 is distant.
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Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
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