Week in FX Europe – A weaker EUR and Yen Conspires to Kill US Exports

With this strong move higher of the dollar across the board, further pressure on the EUR is certainly logical, but how much more? Thus far, the dollar has retained its strong bid tone that has been fueled by USD/JPY's rise above firstly ¥100, then ¥101 and now threatening ¥102 in the past 24-hours. Indeed it was also heavy macro fund buying of USD/CHF that has been a factor for the EUR to handily slip below 1.3000 late this week. Thrown in some Euro official account selling and hiking of corporate bids near the single currency's stellar support levels (1.2970-80) has allowed the EUR to consider spiraling through its 200-DMA (1.2950). A close well below this level will only add to the further bearish pressure of 17-member currency.

The ECB cutting rates last week and even hinting at more easing, coupled with Euro-policy makers remarks suggesting that that they are prepared to even go down the negative rate route if its required to get the Euro-zone economy back on a strengthening path, may be enough ‘juice’ to take on this longer term support. By day's end, the EUR and Yen conspire to kill US exports – a viscous circle we are creating!

 

WEEK AHEAD

* CNY New Yuan Loans
* USD Advance Retail Sales
* EUR German Consumer Price Index
* EUR German ZEW Survey (Economic Sentiment)
* EUR German Gross Domestic Product
* GBP UK Jobless Claims Change
* EUR Euro-Zone Gross Domestic Product
* GBP Bank of England Inflation Report
* JPY Gross Domestic Product
* EUR Euro-Zone Consumer Price Index
* USD Consumer Price Index
* CAD Consumer Price Index
* CAD Bank Canada Consumer Price Index Core
* USD U. of Michigan Confidence

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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Dean Popplewell

Dean Popplewell

Director of Currency Analysis and Research at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2007, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell