Forex snapshot

US dollar dominance remains, with both the pound and euro failing to reclaim much of their lost ground.

Euro and US dollar notes
Source: Bloomberg

EUR/USD losses could continue

Any swift bounce back above the $1.32 level from EUR/USD has been quashed, as it has now spent the last 48 hours trading below this level.

There have been some changes in the eurozone over the last week, but we are no further forward than we were seven days ago.

The speech from European Central Bank leader Mario Draghi strongly pointed towards stimulus to aid the eurozone, but judging by the reactions of German finance minister Wolfgang Schaeuble this is not a unanimously popular decision. The Germans favour austerity, and this sentiment was highlighted when Angela Merkel publicly praised some of the tough measures taken by Portugal and Spain, in dealing with the required austerity, to turn things around. In conjunction with this, Francoise Hollande has felt the need to change his government wholesale as he was not receiving the public support required to change the French economy.

Tomorrow will see the latest release of the eurozone’s inflation data, and only the most blindly optimistic investor would be expecting an improvement. A further run below $1.32 could be on the cards.

GBP/USD stil trading below $1.66

For the third day in a row GBP/USD has started the day trading below the $1.66 level, and with almost no economic data expected today it looks unlikely to move higher ahead of tomorrow’s US quarterly GDP figures.

Currency traders favorite past time of late has been to try and second guess timetables for interest rate change for both the Bank of England and the Federal Reserve. Considering the contradictory comments and statements released by both of these institutions, it is no wonder there still is no complete consensus from the markets as to when this will happen.

The next 24 hours appear to have few catalysts that could stimulate the GBP/USD rate back above the $1.66 level, and for the time being a lateral move looks most likely.   

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