Euro looking vulnerable

EUR/USD briefly ventured below $1.0600 and shorting interest seems to have accelerated ever since it broke below uptrend support at $1.08 last week.

Euro
Source: Bloomberg

There is a bit of stability here early in Asia around $1.0600 but the fundamentals still support further weakness in the pair. We have the ECB meeting this week but nothing new is expected.

Perhaps Mario Draghi’s press conference will bring some commentary around how the economy is performing. Given the recent rebound in some readings, perhaps Mr Draghi will allude to an improving picture.

If this leads to a firmer euro, I feel this would present some fresh selling opportunities. Neckline support was broken at $1.0700 and this level has since turned into resistance.

I feel traders could look at fresh selling opportunities in the pair on a rally back into $1.0700. My potential targets will be back to March lows below $1.0500.

Click to enlarge

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.

Find articles by analysts

Find out more about