Currency analyst

EUR/USD downfall and recent revival

The EUR/USD currency pair has been falling precipitously for three days in a row, but failed to break out the 1.10 support line. The USD was the main mover of the pair since there were no news from the Eurozone and dormant European Central Bank. The story with Deutsche Bank paled into insignificance having created a stir over the bank’s inability to pay the fine off. The US dollar gained momentum before the September’s FOMC minutes which were expected to be rather hawkish. Now, when the release revealed a certain share of disagreement among the FOMC members, the euro is rising from the ashes.

The recent euro recovery could be explained from the purely technical perspective. The RSI Oscillator on the daily timeframe fell into the oversold area. From this we may conclude that there should be some sideways consolidation in the range of the 1.103 – 1.108 levels. The problems with Brexit and European banking system threaten to result in the another downfall, though. The DB’s situation with its $14.5 bln fine remains unresolved. In addition, it has recently been announced that Deutsche Banks will have to pay $9.5 m for failings in its equity research department. The next trading sessions could be critical for the EUR/USD, especially if Fed’s Chair J. Yellen sounds more hawkish than usually at tomorrow press conference.

So, we believe that today’s euro revival is not long-lasting. If quotes fall again and 1.10 handle fails to hold, there might be a further drop towards the 1.0950 (July’s low).

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