EUR/USD inter-markets: the pair might be done with its near-term technical bounce
|Following the Brexit led sharp fall to over 3-month low levels, a slight improvement in global risk sentiment assisted the EUR/USD pair to recover and move back around 200-day SMA near 1.1100 region.
The prevalent risk-on sentiment is depicted by a slide in the Volatility Index (VIX) over the past couple of days and is reaffirmed by a sharp rebound in equity markets across the globe.
Adding to this, fading expectations of an imminent Fed rate-hike, as depicted by CME Group's Fed Fund futures, has led to a near-term corrective move for the US Dollar and is seen assisting the pair to continue with its post-Brexit rebound. The current Fed fund futures are now pricing-in a negligible probability of a rate-hike, at-least till the FOMC meeting in November.
Further recovery, however, seems unlikely in the backdrop of uncertainty around the economic and political implication of last week's historic UK-EU referendum. Moreover, markets also suspect that other Euro-zone member countries might also come-up with similar referendums that raise questions over the existence of the European Union. Market concerns are reflected by a tepid bounce in German Bunds and US 10-year treasury yields, which remain within striking distance of recent lows when the so-called Brexit triggered turmoil in global financial markets.
Summing it all, the EUR/USD pair might be done with its post-Brexit technical bounce, primarily led by short-covering, and could resume its near-term weakening trend.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.