EURUSD To Test Yearly Low
Euro tumbles amid rush to safe haven dollar
Share this:
EUR/USD has dropped through $1.1 its lowest level since late February amid a rush for the safe haven dollar.
German ZEW sentiment data caused an already panicked market to fret some more. The ZEW index, which gauged financial analyst’s sentiment and view on an economic situation dived in March, recording the steepest drop on record.
The ZEW index fell to -49.5 in March from +8.7 in February and is now at its lowest level since December 2011.
German recession
Germany is heading for a recession. The situation is fast moving. However yesterday Chancellor Angela Merkel announced a general lock down of Europe’s largest economy. All shops are to be closed, no touristic travel domestically or abroad, restaurants open until 6pm and no sports or cultural events allowed. So, consumption will drop dramatically. Large car manufacturers have also announced a temporary halt to production. The supply shock demand shock will be crippling and the economic impact will be staggering.
And the problem is not just Germany, Italy, Spain and France, the largest economies in the eurozone all face severe pressure from the coronavirus outbreak, as governments lock down countries with already very fragile economies.
Germany is heading for a recession. The situation is fast moving. However yesterday Chancellor Angela Merkel announced a general lock down of Europe’s largest economy. All shops are to be closed, no touristic travel domestically or abroad, restaurants open until 6pm and no sports or cultural events allowed. So, consumption will drop dramatically. Large car manufacturers have also announced a temporary halt to production. The supply shock demand shock will be crippling and the economic impact will be staggering.
And the problem is not just Germany, Italy, Spain and France, the largest economies in the eurozone all face severe pressure from the coronavirus outbreak, as governments lock down countries with already very fragile economies.
US retail sales miss
Meanwhile US data is also disappointing. Retail sales declined a -0.5% in February, missing expectations of 0.2% increase. These figures show that consumption, the main driver of the US economy had started to slow even before coronavirus social distancing measures were enforced, raising fears that the data out of the coming months will be hideous.
Meanwhile US data is also disappointing. Retail sales declined a -0.5% in February, missing expectations of 0.2% increase. These figures show that consumption, the main driver of the US economy had started to slow even before coronavirus social distancing measures were enforced, raising fears that the data out of the coming months will be hideous.
Offshore Dollar Market Stress
Despite the Fed’s best efforts to ease pressures in the money markets recent signals suggest that the moves haven’t worked. This is most likely a result of lenders hoarding the dollar in expectation of increased liquidity needs from companies and growing concerns over bad loans. The pressure was most explicit in the euro/dollar 3-month FX spread which widened to 124 bps at one point, its widest level since the European debt crisis and up from just 20 bps earlier this month. This means that market player are willing to pay higher premiums for dollars, an amber warning signal flashing.
EUR/USD hit a 14 month high on 9th March. Since then a correction has been is play which could see the pair retest the year low. Global turbulence in the financial markets and fears of a recession are seeing traders seek out safe havens such as the dollar and the yen.
Despite the Fed’s best efforts to ease pressures in the money markets recent signals suggest that the moves haven’t worked. This is most likely a result of lenders hoarding the dollar in expectation of increased liquidity needs from companies and growing concerns over bad loans. The pressure was most explicit in the euro/dollar 3-month FX spread which widened to 124 bps at one point, its widest level since the European debt crisis and up from just 20 bps earlier this month. This means that market player are willing to pay higher premiums for dollars, an amber warning signal flashing.
Levels to Watch
EUR/USD is down over 1.5% at $1.10, it has picked up off session lows of US$1.0974. It trades below its 50, 100 and 200 sma and comfortably below the descending trendline.
Immediate support can be seen at $1.0974 (today’s low) prior to $1.0953 (low 28th Feb) and $1.0880 (low 26th Feb).
Resistance can be seen at $1.1026 (200 sma), $1.1118 (today’s high) and $1.1130 (100 sma). We would be looking for a move above $1.1170 to negate on the current bearish trend on 4 hour chart.
EUR/USD has dropped through $1.10 to its lowest level since late February, amid a rush for the safe haven dollar.
German ZEW sentiment data caused an already panicked market to fret some more. The ZEW index, which gauged financial analyst’s sentiment and view on an economic situation dived in March, recording the steepest drop on record.
The ZEW index fell to -49.5 in March from +8.7 in February and is now at its lowest level since December 2011.
German recession
Germany is heading for a recession. The situation is fast moving. However yesterday Chancellor Angela Merkel announced a general lock down of Europe’s largest economy. All shops are to be closed, no touristic travel domestically or abroad, restaurants open until 6pm and no sports or cultural events allowed. So, consumption will drop dramatically. Large car manufacturers have also announced a temporary halt to production. The supply shock demand shock will be crippling and the economic impact will be staggering.
And the problem is not just Germany, Italy, Spain and France, the largest economies in the eurozone all face severe pressure from the coronavirus outbreak, as governments lock down countries with already very fragile economies.
Germany is heading for a recession. The situation is fast moving. However yesterday Chancellor Angela Merkel announced a general lock down of Europe’s largest economy. All shops are to be closed, no touristic travel domestically or abroad, restaurants open until 6pm and no sports or cultural events allowed. So, consumption will drop dramatically. Large car manufacturers have also announced a temporary halt to production. The supply shock demand shock will be crippling and the economic impact will be staggering.
And the problem is not just Germany, Italy, Spain and France, the largest economies in the eurozone all face severe pressure from the coronavirus outbreak, as governments lock down countries with already very fragile economies.
US retail sales miss
Meanwhile US data is also disappointing. Retail sales declined a -0.5% in February, missing expectations of 0.2% increase. These figures show that consumption, the main driver of the US economy had started to slow even before coronavirus social distancing measures were enforced, raising fears that the data out of the coming months will be hideous.
Meanwhile US data is also disappointing. Retail sales declined a -0.5% in February, missing expectations of 0.2% increase. These figures show that consumption, the main driver of the US economy had started to slow even before coronavirus social distancing measures were enforced, raising fears that the data out of the coming months will be hideous.
Offshore Dollar Market Stress
Despite the Fed’s best efforts to ease pressures in the money markets recent signals suggest that the moves haven’t worked. This is most likely a result of lenders hoarding the dollar in expectation of increased liquidity needs from companies and growing concerns over bad loans. The pressure was most explicit in the euro/dollar 3-month FX spread which widened to 124 bps at one point, its widest level since the European debt crisis and up from just 20 bps earlier this month. This means that market player are willing to pay higher premiums for dollars, an amber warning signal flashing.
EUR/USD hit a 14 month high on 9th March. Since then a correction has been is play which could see the pair retest the year low. Global turbulence in the financial markets and fears of a recession are seeing traders seek out safe havens such as the dollar and the yen.
Despite the Fed’s best efforts to ease pressures in the money markets recent signals suggest that the moves haven’t worked. This is most likely a result of lenders hoarding the dollar in expectation of increased liquidity needs from companies and growing concerns over bad loans. The pressure was most explicit in the euro/dollar 3-month FX spread which widened to 124 bps at one point, its widest level since the European debt crisis and up from just 20 bps earlier this month. This means that market player are willing to pay higher premiums for dollars, an amber warning signal flashing.
Levels to Watch
EUR/USD is down over 1.5% at $1.10, it has picked up off session lows of US$1.0974. It trades below its 50, 100 and 200 sma and comfortably below the descending trendline.
Immediate support can be seen at $1.0974 (today’s low) prior to $1.0953 (low 28th Feb) and $1.0880 (low 26th Feb).
Resistance can be seen at $1.1026 (200 sma), $1.1118 (today’s high) and $1.1130 (100 sma). We would be looking for a move above $1.1170 to negate on the current bearish trend on 4 hour chart.
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
EUR/USD Update: Will Fed Expectations Keep Pressure on the Euro?
The week continues to present challenges for the euro's short-term strength. This is reflected in the recent performance of EUR/USD, which has declined by nearly 0.6% over the last three trading sessions
EUR/USD Forecast: Euro Extends Losses Ahead of Fed Rate Decision
The euro has started to face a more challenging period in the short term. The EUR/USD pair has already declined by nearly 0.81% over the last four trading sessions, a move that has begun to reinforce a meaningful bearish bias in favor of the U.S. dollar.
Gold, Silver, DXY Outlook: Charts Test Defining Support Levels
Gold, Silver, DXY Outlook: Charts test defining support levels as crude oil prices hold above $100, U.S. Treasury yields move higher and hawkish FOMC risks come into focus. Key scenarios to watch.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.