- EUR/USD is printing fresh lows at 1.1304 as the pair continues to bleed, just a couple of pips above the 2018 lows and August the 14th low at 1.1301.
- EUR/USD has been in a broad-based decline since late Sep highs at 1.1815, supported once in the 1.1430’s back to the 1.1600’s but failures there opened the gateways to lower levels as bull commitments slowly but surely faded away.
The greenback has certainly found a new sense of purpose on the charts in the last couple of weeks given the continued uncertainties that have trumped the sentiment for the end, or at least a pause, in the Fed’s path of interest hikes by the end of 2019 or mid-2020’s.
EUR/USD has been chipping away within a bearish channel, hugging the channel’s resistance line on the way to the 2018 lows, so it has not been an easy ride for the bears over the last number of sessions. However, month-end could be playing a role as London traders pack up for the day and month.
Waiting for the orders supply and a run on stops at and below 1.1300
Markets like to push the barriers, certainly at such significant levels with order managers looking for liquidity. Stops runs are likely to be a factor contributing to the sudden pace of flow into the London fix as well. Some entity was protecting 1.1300 on the initial test, yet there are little signs of commitment on the third attempt so far – The five-minute charts show an even flow of bis and offers since the strong bid after the London fix that sent the pair back from 2018 lows to a high of 1.1324. A break below 1.1300 and 1.1296 could easily open up the halfway mark on the 1.12 handle.
Turkey risks rearing their ugly head, again
Meanwhile, there are plenty of fundamental reasons for the downside when taking into mainland Europe’s political strife. However, the most recent case for the downside is with Turkey’s woes rearing their ugly head again. The latest news there has seen the Lira drop, and the Aussie tends to track the performance of emerging markets and the commodity complex as a whole.
A few hours after Turkey’s central bank published its inflation outlook which envisages consumer prices remaining well above the official target at least until 2020, Treasury and Finance Minister Albayrak announced a wide range of tax cuts,” analysts at Rabobank explained. “While this is an attempt to ease the burden on battered Turkish households, the announcement reignited the upside pressure on USD/TRY and EUR/TRY.”
The analysts explained that such a reaction implies that the market could be concerned that the central bank may not be sufficiently supported by the administration in its efforts to rein in inflation. “After all, the purpose of lower taxes is to revive consumption, which is inflationary.”
EUR/USD levels
A break below the 2018 lows and 1.13 the figure opens risk initially to the weekly pivot line and all the way back to 2015 which is located at 1.1264 protecting the 61.8% retracement at 1.1185. Bulls need a break above the 21-D SMA at 1.1479 to relieve this built up pressure and open risk back to the 61.7% fib at 1.1542.
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