Quantitative Easing

EUR / USD moves closer to 1.1600 amid global weakness in the US dollar


  • The US dollar is under selling pressure amid rising US T bond yields.
  • The single currency prolongs its sharp rise for two days, threatening to exceed 1.1600.
  • EUR / USD: A break above 1.1600 would expose 1.1650; otherwise, it could drop to 1.1400.

EUR / USD is up for the second day in a row, starting the week off on the right foot, rising 0.18%, trading at 1.1587 during the day at the time of writing. Positive market sentiment, as evidenced by the rise in US stock indices, surrounds the financial markets. In the forex market, risk-sensitive currencies rise with the NZD, GBP and AUD being the strongest, while the greenback falls, despite rising yields on US Treasury bonds.

Last week, three central banks held their monetary policy meetings. They have all pushed back higher interest rates, in line with what European Central Bank (ECB) President Christine Lagarde said two weeks ago. On Monday, Philip Lane, chief economist at the ECB, said supply bottlenecks and rising energy prices are the main risks for inflation and economic recovery. In addition, added that “our [ECB] The analysis indicates that the euro area is still facing weak medium-term inflation dynamics which remain convincing. In addition, said that economic activity could exceed the expectations of the central bank only if consumer confidence increases and saves less than expected.

Meanwhile, the Federal Reserve has announced the $ 15 billion cut to its quantitative easing program. Plus, he left the door open to taper adjustments. If economic conditions improve faster than expected, the US central bank could step up the pace of scaling its bond buying program, meaning it could end earlier than the first half of 2022 as widely expected. .

That said, the European economic dossier will include Tuesday, the Zew inquiry on Tuesday and speeches by some members of the ECB. ECB President Christine Lagarde and Isabel Schnabel will cross the threads.

Across the Atlantic, the producer price index will be unveiled. Also, Federal Reserve Chairman Jerome Powell will hit the wires.

EUR / USD Price Forecast: Technical Outlook

In the daily chart, the shared currency bounced off the low around 1.1500, moving closer to the 1.1600 figure, which was hit in the last four previous tests, would be a solid resistance level to overcome. A daily close above the latter would expose EUR / USD to further gains. The first supply area would be a downward slope that merges with the 50 day moving average around the 1.1650-80 area. A break above the above would open the door to the October 28 high at 1.1691.

On the other hand, a failure to 1.1600 would open the door to a further decline, with the October 13 low at 1.1524 as the first area of ​​demand. A break below the latter would expose the single currency to new annual lows, around the 1.1400 figure.


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