Euro: USD/EUR (EUR=X) Some dollar volatility
The greenback has been the main mover on currency markets within the past seven days. In the early part of last week, it had been on the back foot as signs of progress in the race for a Covid-19 treatment supported risk appetite. The currency managed to recovery some ground as rising US-China tensions acted as a headwind to sentiment. Although, it still remained slightly down on the week.
In level terms, this is mirrored in EUR/USD, which traded in a $1.08- 1.10 range last week, opening this morning up near the $1.09 level.
At the same time, cable (GBP/USD) is working in the upper half of the $1.21-1.22 range. Meanwhile, EUR/GBP is changing hands close to the center of the 89-90p band.
Elsewhere on financial markets, short-dated Gilt yields hit record lows last week, with 2-year yields falling to –0.08%. there’s growing speculation that the BoE may cut rates below zero.
This was fuelled by Governor Bailey’s comments that negative rates are presently “under active review” by the central bank.
Turning to the week ahead, there’s a comparatively quiet look to the Eurozone macro data schedule. The May print of the German Ifo (due today) and flash reading of HICP inflation for the same month are the highlights. Away from the data, the European Commission is due to outline its proposal for the EU’s Recovery Fund on Wednesday, that may cause some event risk for the euro.
Across the Atlantic, April consumption figures will feature. A sharp fall in consumer spending is forecast, however greenback impact could also be restricted. The currency could prove more sensitive to shifts in risk appetite linked to ongoing US-China tensions and Covid-19 news flow. In the UK, there’s very little out to influence sterling.
Euro/US Dollar Exchange Rate
Euro/Sterling Exchange Rate
Sterling/US Dollar Exchange Rate
Today’s Forex Rates
Euro FX Polls
Shayne Heffernan Trade Idea
“The 1.0750 level underneath is huge support, and even caused a bit of a hammer from the previous monthly candle. that’s one thing to pay attention to because if we break down below the bottom of the range, that’s a serious breach of support. At that time, i think that the euro would go looking for an exchange rate at the 1.0650 level, followed by the 1.05 level.”
“Below that level would be an absolute collapse of the euro, based upon not only the particular price itself but also historical charts. Remember, you’ll be able to look at a synthetic euro in the sense of combining all of the currencies in the same weighting as they’re represented in the euro. By that measurement, a break down below the 1.05 level might have ramifications for the market to fall the way down to the 0.80 below. Obviously, that is an awfully long term call if that happens.” Shayne Heffernan PhD in Economics
Overall, the bias in prices is: Sideways.
The projected upper bound is: 1.11.
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