CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Euro analysis: EUR/USD hits a 6-week low, 1.08 in sight?

Article By: ,  Head of Market Research
May 17, 2023 3:39 PM

Euro takeaways

  • The US dollar is rising against all of her major rivals today despite a lack of US economic data.
  • EUR/USD broke down from its 1.09-1.11 sideways range last week, marking a top.
  • The next level of support to watch comes around 1.0800, and a break below there could expose the 200-day EMA near 1.0700 next.

EUR/USD fundamental analysis

It’s another “buy dollars, wear diamonds” day, with the US dollar rising against all of her major rivals midway through the US session. With no major news out of the US, the moves are being driven more by technical factors than outright fundamental data, though we did see a slight negative revision to the Eurozone’s April CPI (0.6% m/m vs. 0.7% initially) that could be weighing on the single currency.

Meanwhile, the US debt ceiling debate continues to linger, with President Biden announcing that he would cut next week’s trip through Asia short to focus on coming to an agreement. Yesterday’s confab between the President and Speaker Kevin McCarthy was characterized as “productive and direct,” though there is little evidence of an imminent agreement between the two sides.

For traders, it’s worth remembering that as the world’s reserve currency, the US dollar may actually be a short-term beneficiary of any market panic if there is still no deal as the end of the month approaches; we saw a similar dynamic play out back in 2011 when the US credit rating was downgraded as a result of a failure to raise the debt ceiling promptly.

Euro technical analysis – EUR/USD daily chart

Looking at the EUR/USD chart, the price action over the last week looks particularly significant. After spending the latter half of April and the start of May in a sideways range below 1.1100, the world’s most widely-traded currency pair broke down below a near-term bullish trend line and its rising 21-day EMA, marking a near-term top.

After a small bounce back toward 1.0900 to start this week, the pair has again lost its bullish momentum and fallen to a 6-week low under 1.0830:

 

Source: Tradingview, StoneX

Looking ahead, EUR/USD is nearing a key level of previous-resistance-turned-support at 1.0800, where bulls may try to stem the bleeding later this week. If that level gives way, the probability of a continuation down toward the 200-day EMA near 1.0700 would increase markedly.

-- Written by Matt Weller, Global Head of Research

Follow Matt on Twitter: @MWellerFX

How to trade with City Index

You can trade with City Index by following these four easy steps:

  1. Open an account, or log in if you’re already a customer 

    • Open an account in the UK
    • Open an account in Australia
    • Open an account in Singapore

  2. Search for the market you want to trade in our award-winning platform 
  3. Choose your position and size, and your stop and limit levels 
  4. Place the trade

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024