Close Preview x  
     
Close x
Expert Advisor Hosting Request

Please provide the following information:
(All Fields Required)

X My Account Secure Account Login Login

Close x
Online Security

Secure login
Ensuring the security of your personal information is of paramount importance to us. When you sign in to the trading platform, your User ID and password are secure.

The moment you click Login, we encrypt your User ID and password using 128-bit Secure Sockets Layer (SSL) technology.

Browser security indicators
You may notice when you are on our website that some familiar indicators do not appear in your browser to confirm the entire page is secure. Those indicators include the small "lock" icon in the bottom right corner of the browser frame and the "s" in the Web address bar (for example, "https").

To provide the fastest access to the trading platforms, we have made signing in to trading platforms secure without making the entire page secure. Again, please be assured that your ID and password are secure.

Close x

We would like to contact you by telephone to help you make the most of your demo account, and inform you about our products and services. By submitting your telephone number you agree that FOREX.com can contact you by telephone.
Submit
 
Privacy policy
EUR/USD drops on Italy as dollar extends recovery

Updated  May 16, 2018 7:49:42 AM Written by Fawad Razaqzada



The EUR/USD is breaking down as the dollar upsurge continues. This follows buck-denominated gold's meltdown from the day before. The metal remains under pressure amid an appreciating US dollar and rising bond yields. Although yields are slightly weaker today, they remain well supported in the US, especially the short-dated ones, as investors continue to expect there to be at least two more rate increases from the Fed this year. Consequently, the Dollar Index is finding itself at its best level since December. Correspondingly, the EUR/USD pair is at its weakest since the end of last year.

Italian political uncertainty weighs on euro and FTSE MIB

The euro meanwhile is coming under increased pressure because of Italy's heightened political uncertainty, and recent soft patch in Eurozone data. Reports that the Five Star Movement and the League, which are in talks to form a coalition government, are considering a debt relief from ECB to the tune of €250 billion has stoked fears over Italy’s creditworthiness. Italy's FTSE MIB has fallen sharply as a result, as too have the euro, and despite an otherwise bullish day for European stocks. Not only was the EUR/USD down but the EUR/JPY, EUR/CHF and EUR/GBP were all weaker at the time of this writing.

Soft GDP and inflation means ECB is no rush to normalise policy

Meanwhile the consistent weakness in German data in the first three months of the year meant that the economy expand by a modest 0.3% on the quarter, which was weaker than expected, as we found out yesterday. The Eurozone as a whole likewise saw its GDP grow by modestly by 0.4% in the first quarter, which was in line with the expectations. The Euro area’s CPI measure of inflation meanwhile was confirmed today by Eurostat at 1.2% for April year-over-year. With growth and inflation both weak, and Italy’s political uncertainty at the forefront, the ECB will be in no rush to normalise its monetary policy. This should keep the euro under pressure, or at best keep its gains in check, in the months ahead.

EUR/USD breaks support

The EUR/USD’s failure to reclaim the broken 1.20 handle at the start of the week meant that rates remained below the now flattening 200-day average, keeping the short-term bearish momentum intact. The world’s most heavily-traded pair has now broken its previous support around 1.1820/50, a range which is now going to be the first key resistance zone to watch. If the weakness persists, the EUR/USD could drop to test the 1.17 handle next. Around this level, we have the 38.2% long-term Fibonacci retracement coming in at 1.1710 while a prior support and resistance level is seen at 1.1680. We think that the oversold EUR/USD may stage at least a short-term bounce from this 1.1680-1.1710 area, should we get there. For this bounce to happen we ideally want to see a sudden sharp down move to this support area rather than a slow grind, for if the latter were the case then a further breakdown would become likely.

As things stand we will turn cautiously bullish on the EUR/USD on the first sign of a bear trap; for example, if rates goes back above the broken 1.1820/50 support area again. But a clear bullish development would be if a prior high was taken, in this case 1.20.

Source: eSignal and FOREX.com

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that FOREX.com is not rendering investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. FOREX.com is regulated by the Commodity Futures Trading Commission (CFTC) in the US, by the Financial Services Authority (FCA) in the UK, the Australian Securities and Investment Commission (ASIC) in Australia, and the Financial Services Agency (FSA) in Japan. Please read Characteristics and Risks of Standardized Options.

FOREX.COM TWEETS

Test your trading strategies risk free btn_demo_blue_hover.gif OR btn_open_an_account_dark_grey_alt_hover.gif

Have more questions?

Chat Live Now or call 0800 032 1948