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!
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