After spending the first half of the week within a narrow range around 1.1350, the EUR/USD pair came under pressure on Thursday on the back of broad dollar strength following a bounce in US durable good orders and better than expected core CPI figures.
EUR/USD broke below the 1.1270 area, which was the floor of its monthly range, triggering stops and accelerating to fresh February lows sub-1.1200. The pair has fallen as low as 1.1175 on Friday and remains on track to close the week with a loss for second time in a row.
Both technicals and fundamentals factors continue to favor a bearish move. Divergent monetary policy outlooks between the Fed and the ECB continue to weigh on the pair, even after Fed’s Chair Yellen managed to send ambiguous signals during her testimony this week. Next Thursday, the European Central Bank will launch a massive sovereign debt purchase program, so called quantitative easing, which will last until September 2016. In that period, the ECB plans to add more than €1 trillion. The bank is also scheduled to decide on monetary policies, although no changes are expected.
Technically speaking, yesterday’s selloff and loss of the 1.1270/60 area signaled the end of 4-week consolidation phase and shifted the short-term focus to the downside. The broader picture is also bearish, although weekly indicators remain in oversold territory, suggesting a corrective phase might precede a fresh move lower. However, only regaining the 1.1300 psychological level, could ease the immediate pressure.
The 11-year low scored on Jan 26 at 1.1097 is the key level to the downside. A break below should trigger a sharper decline, with 1.1045 as next support area en route to 1.1000.
View Live Chart for EUR/USD
EUR/USD broke below the 1.1270 area, which was the floor of its monthly range, triggering stops and accelerating to fresh February lows sub-1.1200. The pair has fallen as low as 1.1175 on Friday and remains on track to close the week with a loss for second time in a row.
Both technicals and fundamentals factors continue to favor a bearish move. Divergent monetary policy outlooks between the Fed and the ECB continue to weigh on the pair, even after Fed’s Chair Yellen managed to send ambiguous signals during her testimony this week. Next Thursday, the European Central Bank will launch a massive sovereign debt purchase program, so called quantitative easing, which will last until September 2016. In that period, the ECB plans to add more than €1 trillion. The bank is also scheduled to decide on monetary policies, although no changes are expected.
Technically speaking, yesterday’s selloff and loss of the 1.1270/60 area signaled the end of 4-week consolidation phase and shifted the short-term focus to the downside. The broader picture is also bearish, although weekly indicators remain in oversold territory, suggesting a corrective phase might precede a fresh move lower. However, only regaining the 1.1300 psychological level, could ease the immediate pressure.
The 11-year low scored on Jan 26 at 1.1097 is the key level to the downside. A break below should trigger a sharper decline, with 1.1045 as next support area en route to 1.1000.
View Live Chart for EUR/USD
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