The riots in Egypt are taking their toll on the markets – EUR/USD confirms loss of uptrend channel and is falling fast towards the next support line. Update.
The uprising against the Egyptian regime has escalated from youth protests to a large scale, politically backed protest all over the country. A fourth day of anger after the Friday prayers turned into huge demonstrations with hundreds of wounded people and several killed.
Egypt Riot Send EUR/USD Down – Click to enlarge to see the impact of the political events on the currency
The riots weren’t isolated only to Cairo, but were seen also in Alexandria and in the cities on the Suez canal. The Egyptian police has ordered curfew in a few cities and also mobilization of the army. There are speculations about the closure of the Suez canal. This already sent oil prices higher.
But apart from oil prices, the regional instability in the Middle East causes global worries. The Tunisian president was forced to flee the country just a few weeks ago. There are serious protests also in Jordan’s capital, Amman, and in several cities in Yemen.
Forex impact
This geo-political mess is felt in currencies as well – the safe haven currencies such as the US dollar, Swiss franc and Japanese yen are on the rise, and the Euro, pound, Aussie and others are falling.
EUR/USD now trades under 1.36. As seen in the graph, it confirmed the break under the uptrend channel, and is quickly approaching the support line of 1.3576 which supported it earlier in the week.
The next level below is 1.3440 – a strong line which capped the pair for a long time and now works as resistance. Minor lines below are 1.3334 and 1.3267. A recovery will meet resistance at 1.37, a line which the Euro was battling to conquer, and didn’t make it.
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13 Comments
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The € passed 1,37 and kept there time enought to see 1,375, where bears could buy a part. My analisis is that in its fast bullish way the € forget to draw the lower part of its trend, and that something it will do this week. I play € bearish until 1,344 before a slow bullish recovery and rest at 1,398.
On Oil I agreed, time to buy until 89,5 and let see how things play; Middle Easth troubles and US recovery should support this commoditie very strongly.
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Thanks for your comment Jose. I see a stronger dollar.
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Thanks for your posts Yohay, many times I hear the news first here at forexcrunch 🙂
I doubt the Egypt situation will set a trend for $ strength. I’m thinking short term dollar strength until we get a clearer picture of how the Egypt situation will play out.
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