Euro defying gravity

The euro seems to be defying gravity at the moment and managed to rally yesterday particularly against the greenback.

Fifty euro banknotes are arranged for a photograph in London
Source: Bloomberg

The single currency benefitted from comments by ECB President, Mario Draghi, on the back of the ECB meeting. Mr Draghi upgraded inflation forecasts and said the central bank would press on with its bond buying.

EUR/USD started its rally a couple of days ago as optimism around Greece drove sentiment.

The pair rallied back above $1.1000 and has since extended these gains, helped by Mario Draghi. EUR/USD printed a high of $1.1285 (highest since Tuesday 19 May) and is now fast approaching key near-term resistance.

There is a downtrend resistance line from December last year, which capped price during the big run in May. This line currently comes in at around $1.1300 and I feel that’s where some sellers will be looking to return to the market.

The move higher has perhaps been exaggerated by stops and short covering, so perhaps this might mean it’s on its last legs. Analysts are still broadly targeting parity for the pair in the medium term.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material 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 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. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.