EUR/USD Cautious After Monday’s Plunge
EUR/USD – H1
The US Dollar saw another round of demand as NA traders entered on Monday, leading to an impressive start to the year. The move seems to be largely attributed to aggressive Fed rate expectation, since US bond yields also surged.
CME's Fed Watch Tool implies the first rate hike as early as March [1], following the Fed's recent QE tapering acceleration and upgraded dot-plot.
This led the Eurodollar to a sub-1.1300 drop as we had warned yesterday and risk for a move below mid-1.1200s increases. Fresh 2021 lows (1.1185) is a distinct possibility, as the Euro's recovery efforts have been contained by the 38.2% Fibonacci of the "October High/November Low" drop, but it may early for that.
On the other hand, the US Dollar's might wanes and US 10YR Yields ease today, following Monday's rally, with EUR/USD trying to catch a breath. A rebound back above the EMA100 (at around 1.1330) that will ease downward pressure would be reasonable, but the common currency continues to not inspire confidence for its above-1.1380 prospects.
The economic calendar remains a bit light, with US PMIs and JOLTS Jobs Openings standing out, but things heat up during the second half of the week.
Past Performance: Past Performance is not an indicator of future results.
Nikos Tzabouras
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.
References
| Retrieved 26 May 2022 https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html# |
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.