- EUR/USD is correcting a slice of last week's closing offer in thin liquidity and holiday markets.
- EUR/USD dropped on Friday with a safe haven bid in the greenback and made a North American session low of 1.1356 from a 1.1473 Asian high.
Risk-off sentiment soared last week and US equities had their worst week in a decade as political and economic risks mount on both mainland Europe, in the UK and the USA. The US government shutdown sentiment had been weighing on risk appetite during the week and the confirmation of such lead stocks lower and the and yen and US dollar higher. EUR/JPY fell beneath October's low which subsequently helped the euro bears on their quest below the 1.15 handle to get the price below the 55 DMA and daily cloud base.
ECB sentiment weighs
Euribor futures prices were rallying on Friday which highlights that the ECB will likely be cautious in 2019. "While we remain of the view that the current economic outlook still allows the ECB to move in September 2019, persistently weak economic data in early next year could therefore not only change the ECB’s mind," analysts at Rabobank argued.
Meanwhile, markets will now be in holiday mode, meaning that liquidity will be thin with the majority of the major FX centres. On the data front, markets will look towards the December US job report released Friday, Jan 4th. Analysts at TD Securities explained that in the context of pessimistic market sentiment, they expect a payrolls rebound to 190k for December to be interpreted as slightly hawkish." Surveys published so far suggest payrolls likely remained firm, which should keep the unemployment rate unchanged at 3.7%. We also anticipate wages to rise 0.3% m/m, bringing the annual print slightly down to 3.0%."
EUR/USD levels
EUR/USD's bearish closing candle leaves a bearish tint on the charts where price had otherwise been looking for a test above the 1/.15 handle. Instead, the price has failed again and dropped to the cloud base and tests the 20-DMA. "Dips lower should find initial support at the 20-day ma at 1.1359 ahead of the 1.1267 end of November low," analysts at Commerzbank argued. On the upside, a break of 1.15 the figure opens 1.1559 and 1.1649 resistances.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD remained bid above 0.6500
AUD/USD extended further its bullish performance, advancing for the fourth session in a row on Thursday, although a sustainable breakout of the key 200-day SMA at 0.6526 still remain elusive.
EUR/USD faces a minor resistance near at 1.0750
EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.