Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose. CFDs are complex instruments. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

EUR/USD drops to a new one-week low as bearish downtrend resumes

The bearish momentum for EUR/USD continued. The latest round of selling pressure followed a decision by Germany’s top constitutional court.

EUR/USD stays under pressure following German legal ruling

EUR/USD stayed on its current downtrend during Wednesday trade in Asia, following another sell-off in global markets.

After briefly pushing above $1.10 on Friday, the euro posted its third straight daily fall and as UK traders stepped to the desk on Wednesday morning, EUR/USD was treading water just above $.1082.

The bearish trend follows a decision by Germany’s top constitutional court on Tuesday, which ruled that aspects of the European Central Bank’s (ECB’s) ongoing stimulus program contravene German law.

The ruling was made in relation to existing complaints from German lawmakers about the ECB’s asset purchase program, which has been running since 2015.

The matter is separate from emergency policy measures adopted by the ECB in response to the coronavirus crisis.

While it said the ECB program hadn’t violated any law, it gave the central bank a three-month ultimatum to demonstrate how the benefits of its effect are proportioned across EU member states.

Following news of the ruling, bond yields rose and EUR/USD came under additional selling pressure. However, it wasn’t enough to send European stocks into the red, as risk appetite improved on the back of additional moves to reopen aspects of the European economy.

EUR/USD needs a catalyst to reverse current downtrend

Currency traders remained cautious in early UK trade on Wednesday, as EUR/USD fluctuated just above the $1.08 level where it’s held since 24 April.

On the day ahead, Eurozone retail sales for April are due out, coming off a 10.3% slump in March when the Covid-19 crisis brought economic activity to a halt.

The eurozone will also get services purchasing managers index (PMI) data for April, while the US session will be highlighted by ADP Payroll data for April. The numbers will be an important indicator ahead of benchmark non-farm payrolls (NFPs) on Friday, which are expected to show the US unemployment rate climbed to more than 15%.

The cautious Wednesday tone extended into stock markets, with the FTSE index opening flat while futures markets are pointing to a 0.5% gain for the S&P500.

Ready to start trading EUR/USD? you could start trading from just 0.8 pips. Open a live account or practise using a demo version today.

This information has been prepared by IG, a trading name of IG US LLC. This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or warranty is given as to the accuracy or completeness of the above information. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. Any research provided should be considered as promotional and was prepared in accordance with CFTC 1.71 and designed to promote the independence of investment research. See our Summary Conflicts Policy, available on our website.

Start trading forex today

Trade the largest and most volatile financial market in the world.

  • Spreads start at just 0.8 pips on EUR/USD
  • Analyze market movements with our essential selection of charts
  • Speculate from a range of platforms, including on mobile

Live prices on the most popular forex markets


Prices above are subject to our website terms and agreements. Prices are indicative only

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading forex provider.

Stay on top of upcoming market-moving events with our customisable economic calendar.