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.
EUR/USD gravitating back towards $1.35
Light volumes allowed EUR/USD to levitate against the US dollar but while the $1.35 level is providing major support, the bias here still remains to the downside.
Eurozone data continues to get worse, with recent figures from Italy showing inflation has all but disappeared. Again, Mario Draghi might not see deflation, but we’re not seeing inflation either. The general view remains that the European Central Bank will need to do more to get the economy going, or at least to continue combating low inflation.
On a weekly chart the 20-week moving average has crossed below its 50-week cousin, a very bearish signal, having not been in this position since November 2012.
Meanwhile, the $1.35 level on the daily chart stands out as the main element holding the market up. A close below here puts $1.34 into view and then $1.33, both of which saw buyers towards the end of last year. Any upside continues to be capped by the 50-daily moving average around $1.3615.