EUR/USD heads relentlessly higher

The three-month trend of the US dollar weakening against the euro remains solidly in place.

Now that the US debt ceiling and budget issues are off the short-term radar, currency traders have returned to force the EUR/USD currency cross higher.

Tuesday’s delayed US non-farm payroll figures have once again been digested as ‘bad news is good news’. The worse-than-expected data has inferred that any chances of the US QE process being tapered in the short term are reduced, and that the supportive $85 billion monthly boost that predominantly finds its way to equities will remain in place. This continuing process of printing cash is fundamentally weakening the US dollar, while at the same time the gentle recovery taking place in the EU is to an extent reliant on the ongoing assistance of the US Federal Reserve to help prop up equity markets.

Today marks the start of the latest EU economic summit and once again Brussels will host Europe’s finance ministers as they try to map out a way forward. Although there are no major issues penciled in for discussion, you can never tell what will materialise when you get so many European decision-makers in the same room.

Spot FX EUR/USD (DFB) chart

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.