Euro slip rocks FX pairs

It has been an active start to the week with some big moves in the FX space early in Asian trade.

Source: Bloomberg

Major currency pairs slipped before a recovery in a move triggered by a EUR/USD slip. Comments by ECB President Mario Draghi from the weekend, along with developments in Greece, drove some volatility for the single currency.

Mr Draghi suggested the ECB is looking to expand its asset purchases, adding that the council was unanimous on the issue. Meanwhile, officials have been talking about a Greek exit from the Eurozone and reports have suggested Angela Merkel is willing to accept a Greek exit.

It is clear the next few weeks will be all about headline risk primarily out of the Eurozone. EUR/USD traded to as low as $1.1864 in a move exaggerated by stops in the $1.2000 region. This was essentially the pair’s lowest trading level since 2006 as it traded through June 2010 lows.

The pair has since bounced back, bringing a sense of calm to forex markets. While we have seen a recovery, I feel traders will now be looking to sell the pair into strength. Moves into $1.2100 present the preferred risk-reward scenario from a selling perspective.

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.