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. 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.

Risk off moves push down EUR/USD, AUD/USD and USD/JPY

Declines continue across major FX pairs, as the risk-off atmosphere continues to build.

​EUR/USD continues to decline

Yesterday’s US consumer price index (CPI) reading might have marked the first month-on-month (MoM) slowing of price growth in almost a year with EUR/USD, but the overall strength in the US dollar remains firmly in place. After holding above $1.05 for most of the past two weeks, a bearish move with the drop below $1.05 puts the price on a fresh move to the downside, creating a lower low.

In the space of six weeks the price has fallen from $1.12 to $1.05, and now seems poised for fresh losses.

Given the size of the downward move in recent weeks any rebound must be viewed as short-term bounce that will merely create a lower high and solidify the current downtrend.

AUD/USD losses build

The broader global risk-off move shows no sign of slowing down. This has had AUD/USD hard, as one of the currency pairs most attuned to global risk appetite.

In addition, the slowing of gains in commodity prices, itself a function of the stronger dollar, has not helped matters.

Additional declines would seem to point towards a test of $0.6828 and then $0.667. The recent drop below $0.70 confirms the bearish move, with the likelihood that even a bounce towards $0.71 would only provide a fresh selling opportunity.

USD/JPY drops below $1.29

It looks like a short-term retracement could be at hand here with USD/JPY, as the price finally begins to move lower after mostly sideways action for the month so far.

This could develop into the first serious pullback in months here, and might see the ¥124.00 area tested, and result in the creation of the first higher low here since the beginning of the year.

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.

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