EURUSD Price Breaks Down as US Dollar Rides Roughshod
EURUSD Price, Chart and Analysis:
EURUSD finally broke down late yesterday and touched a fresh 22-month low as US dollar strength took out noted EURUSD support levels. The US dollar continues to attract flows with the yield differential between 2-year US Treasuries (2.32%) and German Bunds (-0.60%) supportive of the greenback. The break lower had been expected over the last few weeks with official data pointing to a sharp economic slowdown in Germany and the Euro-Zone.
The US dollar is at, or close to, highs last seen nearly two years. The strength of the USD - the cleanest shirt in the laundry basket – comes despite a growing realization that the next move in US interest rates is likely lower. Central banks around the globe have been adopting a more dovish stance over the last few months as economies weaken and inflation stays stubbornly below target.
The US dollar chart is showing signs that the recent bull surge is overdone with the CCI indicator showing the greenback at extreme overbought levels in the short-term. The overall set-up however remains positive with a cluster of higher lows and higher highs seen since the start of the year.
US Dollar Basket (DXY) Daily Price Chart (June 2018 – April 25, 2019)
EURUSD is currently trading around 1.1140, the lowest level seen since late-June 2017. The next support zone is between 1.1020 and 1.1070 from mid-May 2017. The pair looks oversold in the short-term, using the CCI indicator. Coming up, two important US releases with durable goods orders later today and the first look at US Q1 GDP on Friday. Both releases have the ability to steer the US dollar in the short-term.
EURUSD Daily Price Chart (May 2018 – April 25, 2019)
Retail traders are 70.0% net-long EURUSD according to the latest IG Client Sentiment Data, a bearish contrarian indicator. However recent daily and weekly positional changes give us a stronger bearish contrarian bias.
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