The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
The Federal Reserve may have been coy in removing the words ‘considerable time’ from its statement last week, but markets are still under the impression that this central bank will be the first to move in terms of monetary policy tightening.
The fears of a Greek exit and the associated volatility remain front and centre nevertheless, and the prospect of easing from the European Central Bank in the face of deflation is still one of the key drivers for the single currency.
The correlation between GBP/USD and EUR/USD is still apparent and, with the euro ratcheting up another two-year low against the dollar last week, we may well see additional downside for sterling.
EUR/USD downside prevails
A pair's new low of 1.2220 has rendered the recent bullish wedge fairly pointless on EUR/USD, and while it is below the 50-daily moving average at 1.2503 one could expect to see any near term rallies sold. The 50-hour moving average is capping intraday gains at 1.2272 so any moves down through 1.2250 will see those lows retested. A break above the 1.2280 level could see a push towards the 1.2323 level.