EUR/USD shows no sign of slowing down
Yesterday saw German retail spending reduce and eurozone inflation remain the same. Both of these factors have helped contribute to the euro continuing to strengthen against the US dollar, much to the disappointment of the European Central Bank. Last month’s statement from president Mario Draghi had an instant reaction to EUR/USD as it dropped to $1.3505; however this weakness lasted less than a day.
The negative interest rate on bank deposits has already been implemented, but the targeted long-term refinancing operation changes are not due to begin until September and, other than trying to talk down the strength of the euro, it is difficult to see what the ECB can do.
As my colleague David Madden has stated, the next target was the 200-day moving average at $1.3688 and this has now been broken. Higher highs now look possible.