The EUR/USD pair extended previous session's German election result-led slide and tumbled to its lowest level since August 25, closer to the 1.1800 handle.
The pair maintained it’s offered tone for the second consecutive session and has finally broken down of a four week old trading range. A modest pickup in the US Dollar demand, amid growing prospects of additional Fed rate hike action by the end of this year, has been one of the key factors exerting some fresh selling pressure.
Meanwhile, the shared currency was also being weighed down by Monday's disappointing release of the German IFO business climate index for September and the ECB President Mario Draghi's comments on uncertain outlook for inflation in the Euro-zone.
• ECB's Draghi: Downside risks related to FX markets continue to exist
Against the backdrop of a setback from the German election, Draghi's cautious remarks further dented already weaker sentiment surrounding the common currency and helped negate escalating geopolitical tensions over the Korean peninsula.
• EUR: German elections has provided a reality check on EZ political risks - ING
Later during the day, the Fed Chair Janet Yellen's speech on “Inflation, Uncertainty, and Monetary Policy” would be closely scrutinized for any fresh hints over a possible rate hike move in December, which would eventually provide fresh impetus for the pair's near-term trajectory.
• EUR/USD faces risks of deeper pullback – UOB
Technical levels to watch
A follow through weakness below the 1.1800 handle might continue to drag the pair towards testing its next support near 1.1760-55 area before eventually dropping to 1.1720 horizontal level.
On the upside, any recovery attempts beyond 1.1830-35 area could get extended, but now seems to be capped near 1.1880-85 strong horizontal support turned resistance.
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 retargets the 0.6600 barrier and above
AUD/USD extended its positive streak for the sixth session in a row at the beginning of the week, managing to retest the transitory 100-day SMA near 0.6580 on the back of the solid performance of the commodity complex.
EUR/USD keeps the bullish bias above 1.0700
EUR/USD rapidly set aside Friday’s decline and regained strong upside traction in response to the marked retracement in the Greenback following the still-unconfirmed FX intervention by the Japanese MoF.
Gold advances for a third consecutive day
Gold fluctuates in a relatively tight channel above $2,330 on Monday. The benchmark 10-year US Treasury bond yield corrects lower and helps XAU/USD limit its losses ahead of this week's key Fed policy meeting.
Bitcoin price dips to $62K range despite growing international BTC validation via spot ETFs
Bitcoin (BTC) price closed down for four weeks in a row, based on the weekly chart, and could be on track for another red candle this week. The last time it did this was in the middle of the bear market when it fell by 42% within a span of nine weeks.
Japan intervention: Will it work?
Dear Japan Intervenes in the Yen for the first time since November 2022 Will it work? Have we seen a top in USDJPY? Let's go through the charts.