EUR/USD looks at monthly lows after a short-lived recovery

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  • Euro pauses its fall against the US Dollar but remains under pressure. 
  • DXY up 0.11% after retreating from the top, on its way to highest close in months. 

The EUR/USD pair bottomed earlier today at 1.1116, the lowest level since mid-2017. During the American session bounced to the upside, amid a correction of the US Dollar and rose to 1.1155. It failed to hold on top of 1.1150 and approached daily lows again. 

As of writing trades around 1.1130, modestly lower for the day, about to post the third loss in a row and the lowest close since June 2017. While the greenback continues to be among the top performers, the euro holds to its weakens on the back of soft EZ data. 
The US Dollar Index (DXY) peaked today at 98.27 before correcting lower to 98.15. 

Our best guess is that recent developments are more a redefining of new (lower) ranges for currencies rather than the beginnings of a new meaningful multi-week trend that sends the USD materially higher. That, however, does not preclude a test of 1.10 in EUR/USD and a DXY at 100; if anything it seems more likely than not in the near term, especially if S&P cuts Italy’s sovereign rating when they complete their review this week (currently BBB, two-notches above junk)”, wrote Richard Franulovich, Head of FX Strategy, at Westpac. 

US Data ahead of Friday’s GDP 

Data released today showed an increase of 2.7% in durable goods orders in March, surpassing expectations. “Core capital goods orders—a key leading indicator of future business spending—rose 1.3% in March, suggesting the economy may be carrying momentum into the second quarter. But, the fall in core capital goods shipments (down 0.2%) still suggests a weak outturn for business spending in tomorrow’s first estimate of Q1 GDP”, said Wells Fargo analysts. In a different report, initial jobless claims increased by 37K from the previous week’s revised level to 230K, the highest since February, against expectations for 200K. 

On Friday, no relevant economic reports are due from the EZ. In the US, the first estimate of Q1 GDP will be released. Market consensus point to a reading of 2.1%. “We note greater uncertainty in Q1 GDP than usual, thanks largely to the government shutdown over December-January, which led to delayed salary payments for 800,000 federal employees, and disruption to tax refunds and regulatory approvals”, explained Bill Diviney, senior economist at ABN AMRO.

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