Currency Analyst since 2010

EUR/USD: life below $1.3500

EUR/USD closed at $1.3465 yesterday after breaking below the psychological level of $1.3500. USD/CHF pair, which has a reverse correlation with EUR/USD, closed above the psychological level of 0.9000.

As EUR/USD breached the key support levels of 2012-2013 and renewed this year’s minimum, the market becoming bearish and more willing to try short positions.

For a long time the single currency was supported by the monetary inflow into the euro area. Now the situation’s starting to change: PNP Paribas notes that purchases of foreign securities by European investors exceed demand for euro zone assets from abroad. Bank of America Merrill Lynch adds that there has already been some profit taking on euro zone’s equities: according to the bank’s monthly fund managers’ survey a net 35% of managers were overweight euro zone’s stocks this month, down from a net 43% overweight in June.

According to BNPP, euro has scope to fall to $1.3200. The bank maintains euro shorts versus USD, GBP and NZD.

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