News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
More View more
Real Time News
  • S&P 500, Nasdaq Rally After the Fed; 10 Year Yield to Two-Month-Highs
  • #Bitcoin Outlook: $BTCUSD Bounce From 40K, Fake-out or Shake-out? -
  • While JPY gets clobbered, CHF decides to turn a blind eye to yields $CHF
  • The surprise 100 basis point cut from the Turkish central bank (to 18%) generated the expected pressure for $USDTRY. That said, I don't think it was the market that decided the momentum should die out at 8.8000 again...
  • surprised that $NQ is holding up so well with what rates are doing. 10 year yield at a 2 month high, $Nasdaq still holding resistance at prior support
  • The S&P 500 has recovered all the ground it lost at the start of the week and the Dollar has slumped post FOMC and PMIs. DailyFX's @JohnKicklighter gives a brief overview of the market for Thursday!
  • The future taper isn't enough to urge the Dollar to a critical bullish break. In turn, $EURUSD has reversed shy of of August's trough and keeps in play an inverse head-and-shoulders pattern with a neckline at 1.19
  • USD/CAD testing short-term moving average support. Traders have cut their long exposure over the week. Get your market update from @nickcawley1 here:
  • In the West, that qualifies as a default action. Let's see how it is treated in the world's second largest economy
EUR/USD Outlook Mired by Failure to Defend March Low

EUR/USD Outlook Mired by Failure to Defend March Low

David Song, Strategist

EUR/USD Rate Talking Points

EUR/USD fails to defend the 2021 range as it takes out the March low (1.1704), and the exchange rate may continue to trade to fresh yearly lows ahead of the Kansas City Fed Economic Symposium scheduled for August 2628 as it extends the series of lower highs and lows from the start of the week.


EUR/USD Outlook Mired by Failure to Defend March Low

EUR/USD gives back the bullish reaction to the Federal Open Market Committee (FOMC) Minutes on the back of US Dollar strength, and speculation for a looming change in Fed policy may keep the exchange rate under pressure as the European Central Bank (ECB) appears to be on a preset course.

In a recent blog post on the ECB’s website, Chief Economist Philip Lane emphasizes that “a commitment to maintain monetary accommodation on a persistent basis is essential in view of the effective lower bound constraint and the shortfall in the medium-term inflation outlook relative to the two per cent target,” with the official largely defending the dovish forward guidance for monetary policy as the Governing Council stands “ready to adjust all of our instruments, as appropriate, to ensure that inflation stabilises at our two per cent target over the medium term.

The comments suggest the ECB will stick to the same script at its next interest rate decision on September 9 as the central bank braces for a transitory rise in inflation, and the deviating paths for monetary policy may keep EUR/USD under pressure as a growing number of Federal Reserve officials show a greater willingness to switch gears.

In turn, failure to defend the 2021 range may continue to push EUR/USD to fresh yearly lows amid growing bets for an imminent shift in Fed policy, but a further decline in the exchange rate may fuel the crowing behavior in retail sentiment like the behavior seen earlier this year.

Image of IG Client Sentiment for EUR/USD rate

The IG Client Sentiment report shows 62.33% of traders are currently net-long EUR/USD, with the ratio of traders long to short standing at 1.65 to 1.

The number of traders net-long is 12.15% lower than yesterday and 19.24% lower from last week, while the number of traders net-short is 3.52% higher than yesterday and 2.78% higher from last week. The decline in net-long position comes as EUR/USD has helped to alleviate the crowding behavior as 67.80% of traders were net-long EUR/USD last week, while the rise in net-short position comes as the exchange rate trades to a fresh yearly low (1.1666).

With that said, the break of the March low (1.1704) instills a bearish outlook for EUR/USD ahead of the Fed symposium on tap for later this month, and the exchange rate may continue to trade to fresh yearly lows as it extends the series of lower highs and lows from the start of the week.

EUR/USD Rate Daily Chart

Image of EUR/USD rate daily chart

Source: Trading View

  • EUR/USD trades below the 200-Day SMA (1.2004) for the first time since April as the advance from the March low (1.1704) failed to produce a test of the January high (1.2350), with the exchange rate trading to a fresh yearly low (1.1666) in August as the 50-Day SMA (1.1846) now reflects a negative slope.
  • However, the Relative Strength Index (RSI) appears to be diverging with price as the oscillator breaks out of the downward trend from earlier this year, with the indicator holding above oversold territory even as EUR/USD fails to defend the 2021 range.
  • A close below the 1.1700 (23.6% expansion) to 1.1710 (retracement) region brings the Fibonacci overlap around 1.1640 (50% expansion) to 1.1670 (50% retracement) on the radar, with the next area of interest coming in around 1.1580 (61.8% expansion).

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.