EUR/USD drops to fresh two-year lows, eyes 1.0900
- US Dollar strengthens near the end of the American session, DXY prints new highs.
- EUR/USD still holds above 1.0900, heads for lowest daily close since May 11, 2017.
The EUR/USD pair broke to the downside after moving for hours within a small trading range and fell to 1.0907, hitting the lowest level since 2017. The pair remains below 1.0920/25, under pressure.
The move lower took place amid a stronger US Dollar across the board. The DXY is up 0.20% at 99.25, also about to post the highest close since May 2017. The Greenback rose further following comments from Chinese Foreign Minister Wang Yi who said the US has shown good will by waiving tariffs. He added China is willing to buy more American goods.
EUR/USD more losses ahead?
According to Lee Hardman, currency analyst at MUFG Bank, the EUR/USD pair could accelerate to the downside, if it breaks decisively under 1.0925. “Building evidence of economic weakness in the Eurozone is beginning to weigh more on the euro again. The ECB has already set out their stall by announcing a comprehensive package of easing measures including open-ended QE. The burden still falls on the ECB in the near-term to support growth in the euro-zone. It is encouraging record low euro-zone yields and a weak euro. We don’t see that dynamic changing soon. In contrast, the US economy has recently shown some signs of improvement”.
They see that it is not clear that the Federal Reserve will cut rates again this year and a more favourable environment for a stronger US Dollar is being created. Data today showed a larger-than-expected increase in US Pending Home Sales.
Tomorrow, the September EZ Confidence report is due while in the US data to be released includes August Personal Income and Spending report (includes the core PCE), August Durable Goods Orders and University of Michigan Consumer Sentiment Index.
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
