Euro Price Slide Set to Continue as European Elections Draw Closer
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EUR price, news and analysis:
- EURUSD is continuing the drift lower of the past week on concerns that the latest European Parliament elections will see a rise in populism and Euro-skepticism.
- That’s bad news for the Euro, which could yet lose more ground against a backdrop of trade wars and Brexit.
Euro price weakness may persist
European Parliament elections take place this week, beginning Thursday and ending Sunday, with the results likely to confirm the rise of populism and Euro-skepticism. That could spell further losses for the Euro, which has already dropped to its lowest level since May 3 and has been easing for the past week.
EURUSD Price Chart, Hourly Timeframe (May 13-21, 2019)
Chart by IG (You can click on it for a larger image)
For traders, one caveat is that this expected move away from the EU’s mainstream political parties may be already priced in to the EURUSD exchange rate. A second is that price volatility remains low and the elections look unlikely to boost it.
However, investors will have time to analyze the election outcome thoroughly between the results Sunday and the opening of markets Monday – particularly necessary as the results will be clouded by national concerns in each EU country, with the debate centering on Brexit in the UK, for example. Still, looking further ahead, a good showing by far-right political parties will likely raise doubts again about the stability of the EU.
There could also be a power vacuum as a move away from center-right and center-left politicians leaves whichever party wins the most seats having to rely on resurgent Green parties for a majority.
From a long-term technical perspective, the downtrend that began eight months ago remains in place and a further decline to 1.10 looks possible. Sentiment data also point to a weaker EURUSD, with 59% of retail traders long and just 41% short – a bearish signal from a contrarian viewpoint.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.