Euro encounters resistance

After a brief recovery, the euro encountered resistance in the $1.2500 region against the greenback.

Mario Draghi
Source: Bloomberg

The fundamentals just continue to work against the single currency and ECB President Mario Draghi is also consistently aiding the weakness. Mr Draghi spoke again and reinforced that all assets are under consideration should additional measures be required. The downtrend on EUR/USD has been in place since August and capped prices through October and November. Failure to close above this resistance yesterday has seen traders resume shorts and will likely be targeting November lows at $1.236 in the near term. A potential catalyst for price action today is likely to be the euro area flash CPI report. Until the pair closes above the downtrend resistance, I feel traders will continue to look for selling opportunities on rallies.   

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.

Find articles by analysts

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.