EUR/USD bears continue to be leading the game for the past six days, and there are few reasons for bulls to stand in the way of the currency pair's slide for now. Brittle eurozone growth remains a major issue. Italy's December industrial output came in drastically below estimates and hit its lowest level since January 2018, this disappoints investors. The data helped rally euribor prices as well as drive German Bund yields lower. The data helped push the euro lower against the major DM (developed market) currencies and widen German-U.S. yield spreads, all of which contributed to EUR/USD's slide to a 4-month low.
Other reasons suggest that the risks of declining EUR/USD remain. Euro-area inflation expectations are falling again and look set to resume their recent down trend. Options investors are less optimistic about EUR/USD rallying as risk reversals show that premiums for EUR/USD calls over puts are eroding.
Other reasons suggest that the risks of declining EUR/USD remain. Euro-area inflation expectations are falling again and look set to resume their recent down trend. Options investors are less optimistic about EUR/USD rallying as risk reversals show that premiums for EUR/USD calls over puts are eroding.
Technical picture highlight EUR/USD's downside risks. The RSI indicator of daily and monthly chart is below 50. Yesterday's fall below the bottom for October 3rd and 8th enhances already bearish techs. EUR/USD looks set to test 2019's low. A break of that low should target 1.0825/40 support and 1.0800 barriers. A move below 1.0800 could indicate EUR/USD is headed below 1.0600.
No comments:
Post a Comment