EURUSD collapses to 20-year low :: InvestMacro

The EUR bears went on a frenzy today, sending the EURUSD to levels not seen in 20 years as traders cut bets on an ECB rate hike!

The heavy selling was caused by weak economic data from France which not only satisfied the already bleak outlook, but raised fears of a recession in Europe. With geopolitical tensions continuing to hamper the ECB’s ability to raise interest rates as aggressively as the Fed, widening interest rate differentials may fuel the sell-off in EURUSD.

According to Bloomberg, there is now a 60% chance that the dream of parity will become a reality by the end of 2022. The EURUSD last made a comeback in the first trading week of December 2002.

Before we dive into the technical details, it is worth bearing in mind that the Euro is down against most of the G10 currencies today. With fundamentals swinging in favor of the bears, euro weakness could become a major topic this quarter. Although EURUSD remains our focus, the recent sell-off may present new opportunities across other EUR pairs.

The EURUSD breaks the important support…

EURUSD cut the 1.0350 support level like a hot knife through butter.

Prices are very bearish on the daily charts as there have been lower lows and lower highs. Bears have a lot of freedom below 1.0350 due to the absence of any major support levels. The next level of interest can be found at 1.0200 and 1.0000. If prices manage to rise above 1.0350, EURUSD may retest 1.0480.

EURJPY approaching the 50-day simple moving average

After failing to overcome the 144.00 resistance level, EURJPY may see a bearish reversal as a break below 141.50 indicates further downside. Euro weakness may drag the Euro against the Japanese Yen to the 138.00 support level. If the bears lock in a strong daily close below this point, the next level can be found around 134.50.

EURGBP is ever fickle…

There was some movement on the EURGBP currency pair as prices rose below the 0.8580 support level before pulling back higher. This currency pair remains a battleground for bulls and bears. Although the general trend point is north, resistance can be found around 0.8680. Daily close below 0.8580 may encourage selling towards 0.8500 & 0.8440.

EURAUD is fluctuating above the support level

EURAUD could be preparing to collapse below the 1.5150 support level.

It has been confined to a range for the past two weeks with the pressure increasing day by day. Yesterday’s bearish candle indicates that selling might be around the corner with 1.5150 acting as the gatekeeper. A break below this level may open the door towards 1.4900 & 1.4770. If 1.5150 proves to be a reliable support, a return to 1.5300 may be imminent.

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