Euro slide resumes

There was some hawkish commentary out of the US, with Fed Governor Jerome Powell saying economic conditions would evolve in such a way that the Fed would hike in September and December.

Source: Bloomberg

At the same time the recent improvement in housing data has given the greenback a bit of a tailwind and has seen it outperform against the majors again. Perhaps the most significant move was against the euro as the single currency finally lost its grip. In a nutshell, the euro is the funding currency of choice and, when we are risk-on, the euro gets sold off.

EUR/USD dropped to $1.1150, which was its lowest level since 8 June. This move also saw the pair close below the 50-day moving average and this could see traders have more conviction on the short side.

The downtrend that has been in place since December 2014 is still in play and is likely to continue capping prices in the short term. Near-term targets are likely to be in the $1.1000 region where an uptrend support line kicks in.

Click to enlarge

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.