Tuesday, May 27, 2014
The EUR/USD pair traded with a negative bias, as the greenback continued to rally on good fundamentals coming out of the US. We saw US treasury yields rally and gold prices fall which put pressure on the common currency and caused the pair to slide from the session high at 1.3669 to the session low at 1.3613 for a 56 pip range.
Edward Nowotny, who is a member of the European Central Bank's governing council warned Tuesday about the risk of low inflation rates triggering decreasing growth in the euro zone. He added that the governing council would be discussing measures on how to address this risk during their June meeting. Mr. Nowotny's comments come the day after ECB President Mario Draghi warned that there is a risk that low inflation could spiral into a deflationary cycle, where consumers and companies delay purchases and investments. This news, along with a strong reading in US Durable Goods Orders (+0.8%) and US Housing Prices(+12.4%y/y) sent the EUR/USD to session lows.
The recent whipsaw price behavior of the euro is just an indication of the overall uncertainty & indecision surrounding the pair. We may continue to see this range-bound volatility until after the ECB's Monetary Policy meeting on June 5th. However, if we continue to see improving fundamentals from the US, this will accelerate a further move to the downside.
Monday, May 12, 2014
Ranges in the EUR/USD were very tight today, as volatility declined for the first session of the trading week. The single currency only moved within a 25 pip range from the session low at 1.3750 to the session high of 1.3775.
The next risk event for Euro traders will be at the release of the Eurozone and German ZEW data scheduled for early tomorrow morning, with consensus pointing to a small improvement in sentiment. If the survey is in line with expectations, then this will provide support for the Euro.
In today's webinar, we discussed price action in the EUR/USD, EUR/GBP, and EUR/AUD pair and the technical and fundamental reason's for the sell-off in the common currency. We also identified areas of support and resistance for future trades.