Week in FX – EUR Weakness Not About the EURO

The EUR is simply not wanted and all because everyone covets the ‘big’ dollar after Friday’s stellar US jobs report. The single currency’s drop is threatening to seek new week lows, and it seems it would prefer to do so with some conviction. The currency’s decline looks even more dramatic since Draghi comments on Thursday were able to push the 17-member unit to take a peek above 1.3100 for a brief period.

Previously, the EUR had rallied nicely from the ECB rate announcement intra-day lows mostly on the back of investor’s prior positions. A higher percentage of individuals were expecting for, at the “very least,” more dovish words from Draghi. Squeezing the weaker EUR shorts perhaps even further was the “no mention” of the single units value. The market handily caught a bid on the back of the ECB possibly feeling a bit more comfortable with the exchange rate. However, that has all now changed.

Market consensus seems to now expect the EUR to weaken as the gap between the economies of the US and Euro-zone continues to widen. The demise of risk on/risk off and the emergence of new macro stories GBP, JPY and USD are making these markets a lot more interesting and much easier to define.



* JPY Japanese Parliament Vote on BoJ Governor Nominations
* EUR German Consumer Price Index
* USD Advance Retail Sales
* NZD Reserve Bank of New Zealand Rate Decision
* AUD Employment Change
* CHF Swiss National Bank Rate Decision
* USD Producer Price Index
* EUR Euro-Zone Consumer Price Index
* USD Consumer Price Index

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.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis 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 2006, 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