- EUR/USD falls to more than 20-year lows near 0.9550.
- The recovery of the dollar seems not to stop on Monday.
- Germany’s IFO, Lagarde’s speech and Federal Reserve statements stand out on today’s calendar.
After bottoming out at the 0.9550 area, the EUR/USD now manages to regain some poise and climbs back above 0.9600 early in the European session on Monday.
EUR/USD continues to be pressured by the strength of the dollar
EUR/USD enters third consecutive week of losses, bouncing off levels last seen mid June 2002 around 0.9550against the background of the persistent bullish bias around the US dollar.
Regarding the latter, the buying interest in the dollar gained more strength after the latest FOMC event, in which the Fed raised rates by 75 basis points and Chairman Powell kept up the aggressive rhetoric.
In the economic calendar, Germany’s business climate measured by the IFO Institute will be the protagonist of the European morning, along with speeches by De Guindos, Panetta and the President of the ECB, Christine Lagarde .
Across the Atlantic, the Chicago Fed National Activity Index and speeches from the FOMC’s Collins, Bostic and Mester will be released.
What can we expect around the EUR?
The EUR/USD remains under heavy pressure against the background of the incessant recovery of the dollar. The pair fell to levels last seen in June 2002 around 0.9550, which leaves the door open for a continuation of this trend at least in the short term.
Meanwhile, the price action around the European currency is expected to closely follow the dynamics of the dollar, geopolitical concerns and the divergence between the Fed and the ECB. The latter has been further exacerbated by the Fed’s latest rate hike and persistent aggressive messaging from Powell and the rest of his rate-setting peers.
In addition, growing speculation about a possible recession in the euro zone, which seems to be underpinned by the decline in sentiment indicators, as well as the incipient slowdown in some fundamental variables, adds to the sour sentiment around the common currency.
EUR/USD levels
At time of writing, the EUR/USD is down 0.45% on the day, quoting at 0.9642. A break of 0.9552 (26 Sep low), would target 0.9411 (17 Jun 2002 low) on the way to 0.9386 (10 Jun 2002 low). On the upside, the first hurdle is 1.0050 (Sep 20 High), followed by 1.0197 (Sep 12 High) and 1.0272 (100-Day SMA).
Source: Fx Street
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