Euro pressure mounts on stimulus talk

Policy divergence continues to be a key theme and the latest data from the US and Europe suggests EUR/USD is the pair to watch this year.

Euro
Source: Bloomberg

Following yesterday’s CPI data from Europe, traders’ conviction on ECB action also seems to be growing and this saw the euro slip further in yesterday’s trade.

Additionally on the greenback side of the equation, the Fed reinforced its data-dependency as far as rates lift-off is concerned. Data has been good and, leading into the non-farm payrolls reading, sentiment around the greenback is positive.

EUR/USD slipped below the key $1.2000 mark at the beginning of the week, which rattled the bulls. Since then the pair has extended its losses to a low of $1.1802 and is just holding on to the $1.1800 handle.

These levels have not been seen since 2006 and the next level to look out for would be down at around $1.1640 if $1.1800 is breached.

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.