EUR/USD: outlook for June 27 - July 3
EUR/USD breached the uptrend support line since November on the news that Britain voted to leave the European Union. Such decision will have negative consequences for the euro area, which has strong economic ties with the UK. The victory of Brexit voters will also increase political risks in Europe. Populist leaders in France and the Netherlands already made calls for their own referendums to leave. The news from Britain may affect the results of Spanish parliamentary election on Sunday, June 26.
EUR/USD fell almost to 1.0900, before recovering to 1.1100 (50-week MA). The recovery was possible because of the reassurances of the Bank of England that it will provide enough liquidity for financial market. The ECB’s quantitative easing also helped to calm traders. In addition, the Federal Reserve is now less likely to raise interest rates soon because of Brexit uncertainty, and that will limit the strength of the US dollar.
Further resistance is at 1.1200, 1.1350 and 1.1415. On the downside EUR/USD will remain vulnerable for 1.1050 and 1.0900.
Britain is expected to make a formal announcement to the EU at a meeting of the European Council on Monday, June 27. Other important releases from the euro area include German retail sales on Monday, German inflation on Wednesday and the euro area’s CPI on Thursday.