EUR/USD extends slide as bears stay in control amid tension in the EU
Downside pressure continued to extend for EUR/USD in the wake of a German court ruling concerning the legalities of the European Central Bank’s asset purchase program, which has been in place since 2015.
EUR/USD loses more support as sellers retain ascendancy
EUR/USD remains stuck in a bearish downtrend, as markets reassess the outlook for the eurozone economy.
Across global markets on Wednesday, the euro fell below $1.08 for the first time since 24 April amid renewed tensions between the European Central Bank (ECB) and Germany.
EUR/USD failed to find a catalyst in Asia on Thursday, as prices fluctuated just below $1.08
In the wake of a ruling by Germany’s constitutional court which questioned the legality of the ECB’s asset purchase program, German lawmakers pressured the ECB to provide analysis of which EU states benefited from the program, and in what proportion.
However, a number of members on the ECB’s governing council indicated the central bank will push back against the ruling, on the grounds that adherence would serve to undermine the bank’s independence.
The geopolitical tensions add to the uncertain outlook for the eurozone, as the first round of economic data for April shows the scale of the economic impact across the EU.
Despite that, in early-morning UK trade on Thursday the euro had edged back above $1.08.
Some broader risk appetite still remains in the market, as London’s FTSE index opened higher while US stock futures are pointing more than 1% higher.
EUR/USD, GBP/USD and AUD/USD all edge higher
The positive tone to Thursday’s session continued into European trade, where the STOXX Europe 600 index opened slightly higher.
Traders also digested the latest policy decision from the Bank of England (BoE), which saw GBP/USD rise back above $1.24 after four straight days of declines.
The BoE said it expected UK GDP to fall by 14% this year before rebounding by 15% next year. It also flagged additional asset purchases, forecasting that at its current pace the existing quantitative easing (QE) target will be met in July.
AUD/USD also edged higher against the US dollar as buyers regained some ascendancy and pushed the Aussie back towards its 200-hour moving average at $0.6463.
In early data out of Europe, France’s trade balance for March came in at €3.34 billion, against a deficit of €5.22 billion in February.
On the day ahead, there’s March industrial production data out of Germany while the US will release initial jobless claims and March consumer credit numbers (expected to increase). Federal Open Market Committee (FOMC) member Patrick Harker is also scheduled to give a speech discussing the US Federal Reserve’s response to the Covid-19 pandemic.
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
See more forex live prices
Prices above are subject to our website terms and agreements. Prices are indicative only