The euro is certainly behaving as a safe haven currency. Bad news from Germany seems to help the common currency.
EUR/USD is reaching out to 1.13 and breaking out of the triangle. Confirmation is still awaited.
Two pieces of bad news came out of the locomotive of the euro-zone:
- German trade balance fell sharply to $19.6 billion from $22.4 billion last month. This reflects a drop in both imports and exports. Regarding the latter, this is the worst drop since 2009. This is data for August and provides some information on the situation in China.
- Deutsche Bank reported a loss and might not pay a dividend.
It’s important to remember that this trouble does not reflect the VW scandal, which broke out in late September and is likely to hit the German economy for months to come.
So why is EUR/USD rising on bad news in Germany?
The euro is showing us once again that it is a safe haven currency: bad news is good news, even if the bad news comes from home.
This specific spike is also supported by a weaker US dollar across the board.
Here is how the breakout attempt looks on the chart. 1.1290 serves as weak resistance, followed by 1.1373 and the all important double top of 1.1460.
Support awaits at 1.1215 followed by 1.1165. Will the break be confirmed?
More: EUR/USD: Rebound Within A Flag; – SocGen
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