EUR/USD set to close out week under 1.1300, after lockdown fear battering


  • EUR/USD is set to close out the week below 1.1300, a potentially bearish signal for next week.
  • The pair was weighed heavily by European lockdown concerns and later hawkish Fed commentary.

Things are not looking good for EUR/USD, with the currency pulling back beneath the psychologically important 1.1300 level as FX volumes thin and the weekend approaches. Technicians may well view failure to close to the north of 1.1300 as a bearish signal heading into next week. Since EUR/USD broke below a long-term descending trend channel, its not particularly surprising to have seen the pace of the sell-off pick up in recent days. Bearish technicians will have their sights firmly set on a test of the next key area of support around the 1.1150-1.1180 area.

Recapping the day's action then: EUR/USD started the session off above 1.1370, but as the news hit on Friday morning that Austria was to implement a full lockdown and that Germany soon follows, the pair dropped like a stone. Analysts unanimously agree that widespread lockdowns in Europe over the coming months will deliver a significant blow to the Eurozone growth (meaning negative revisions to forecasts), giving the ECB more reason to be dovish in the face of high inflation. By the late European morning, the pair had printed a fresh 16-month lows at 1.12501. Some profit-taking then allowed it to recover back as high as 1.1320 as the US session began, but hawkish vibes from key Fed members which injected upside into short-end and real US bond yields gave USD a boost.

For reference, Governor Christopher Waller called for an accelerated QE taper and said that rate increases could be appropriate as soon as Q2 2022. This followed a similar message from St Louis Fed President James Bullard, who earlier in the week urged the Fed to double the pace of its QE taper to $30B per month in January. Shortly after Waller had finished orating, it was influential Vice Chairman of the FOMC Richard Clarida’s turn. He didn’t speak much on policy but did say that it may be appropriate to discuss an accelerated QE taper in December. Plenty more FOMC members will hit the wires next week market participants will be eager to assess the appetite on the Committee for an accelerated QE taper and earlier rate hikes.

Looking back on the week in its entirety, it’s been an ugly one. At present levels, the pair is set to close with weekly losses of about 1.4%, its worst performance since mid-June. Strong US Retail Sales, NY and Philly Fed survey, Weekly Jobless Claims and Building Permits data, as well as on Friday all helped the dollar push on. Meanwhile, the resolutely dovish tone of core ECB members and the escalating Covid-19 crisis in Europe hurt the single currency.

EUR/Usd

Overview
Today last price 1.1288
Today Daily Change -0.0085
Today Daily Change % -0.75
Today daily open 1.1373
 
Trends
Daily SMA20 1.1527
Daily SMA50 1.1606
Daily SMA100 1.1704
Daily SMA200 1.1863
 
Levels
Previous Daily High 1.1374
Previous Daily Low 1.1314
Previous Weekly High 1.1609
Previous Weekly Low 1.1433
Previous Monthly High 1.1692
Previous Monthly Low 1.1524
Daily Fibonacci 38.2% 1.1351
Daily Fibonacci 61.8% 1.1337
Daily Pivot Point S1 1.1333
Daily Pivot Point S2 1.1293
Daily Pivot Point S3 1.1273
Daily Pivot Point R1 1.1393
Daily Pivot Point R2 1.1414
Daily Pivot Point R3 1.1454

 

 

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.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD: Weekly resistance line, 200-SMA test recovery above 1.1300

EUR/USD pauses corrective pullback from two-month-old support around 1.1330 during the initial Asian session on Tuesday. The major currency pair battles the 200-SMA, as well as a descending trend line from January 17.

EUR/USD News

GBP/USD is testing critical hourly support

GBP/USD is holding tight in somewhat bearish territory below 1.35 the figure. Sterling dropped on Monday to its lowest in three weeks versus the US dollar, with traders moving out of risk and into safe havens due to the expectations of Fed tightening and escalating tensions between Russia and Ukraine.

GBP/USD News

Gold struggles around yearly resistance line with eyes on Fed

Gold bounces off intraday low to extend the previous day’s recovery moves towards a one-year-old descending trend line. That said, the yellow metal picks up bids to $1,841 by the press time of Tuesday’s Asian session.

Gold News

Bitcoin finds buyers despite new six-month and 2022 lows, BTC relief rally on deck

Bitcoin price action on Monday was mainly in a full-blown bear attack, with a new 2022 and six-month lows hit. That all changed near the end of the NY equity market session when buyers poured in to rally Bitcoin higher to close in the green for the second day in a row.

Read more

The sell-off continues as Fed, earnings and Ukraine trigger sell off

US stocks are having yet another calamitous start to the week, both the Nasdaq and the S&P 500 are down more than 3% at the time of writing. The question now is, will this sell off last, or have we been wrong-footed by another strange Monday in the land of investing?

Read more

Forex MAJORS

Cryptocurrencies

Signatures