All trading involves risk. Losses can exceed deposits.

Dollar makes a comeback

The German ZEW economic sentiment data release was a tad below expectations this morning, coming in at 61.7 and slipping back from the seven-year high established last month.

All trading involves risk. Losses can exceed deposits.

Constant ‘reassurances’ from various European Central Bank members that deflation is not of any concern presently have been taken at face value by market participants.

Comments from the Wall Street Journal’s Jon Hilsenrath – who watches the Federal Reserve closely – that the Federal Open Market Committee is likely to continue to pare back its current asset-purchasing scheme by an additional $10 billion per month have also affected price action in the EUR/USD pair.

The dollar has recouped some of its losses now and the dollar index may well make an attempt to push through the 200-day moving average at 81.50, which would help underpin the current trajectory against the euro.

As suggested yesterday, the 100-day moving average at 1.3567 is the key barrier to upside for the single currency now, with the support at 1.3520/25 still holding fast. Any moves back down through the support could see 1.3350 (200-DMA) eyed. Pushing through the 1.35 psychological level will be a tough ask in the interim. Any moves back through the 100-DMA could see a retest of the 1.3620 upside resistance.

Spot FX EUR/USD chart

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.