100-DMA offers EUR/USD support
EUR/USD continues to lull below the $1.38 level, chastened from last week’s comments by Mario Draghi.
The threat of action in June continues to weigh on the mind of currency traders as EUR/USD continues to stagnate. Currently, the 100-day moving average appears to be offering some sort of support, while traders continue to assess the likelihood that Mario Draghi will carry out his threat of taking action to weaken the euro.
Although we have been down this road before, it does appear that this time it could be for real. The dependence that Germany has had on a weak currency has seen its export driven economy begin to squeak, as it remains resolutely strong against the US dollar.
So far 2014 has seen a steady fall in the German ZEW economic sentiment indicator. This morning’s figure is only likely to confirm this trend, adding to signs that action rather than talk is likely to come in June.
As David Madden pointed out yesterday, short-term pressures from Ukraine and looming eurozone flash gross domestic product figures should cap any upwards momentum. Additionally, the relatively tight range EUR/USD has been in this week could remain until Thursday.