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EUR/USD has broken below its 200-day moving average for the first time in 10 months. Mazen Issa, Senior FX Strategist at TD Securities, notes that a dip below the 1.1800 level would imply a new 1.16-1.18 range.

Key quotes

“Despite a recent bounce in EZ PMIs, the EUR still can’t buy a bid. Taken alongside the 200-dma breach, poor vaccine rollout, more lockdowns and more ECB buying suggests that EUR downside has further to run.”

“1.18 is a key pivot, but a break below will likely open talk of a new 1.16/1.18 range.”  

“The DXY is currently flirting with its own break above the 200dma. Since 2000, it’s worth noting that in past episodes where this has happened, the USD has extended higher for an average of 6 months thereafter. The average gain is about 6% too.”