Caution over the downside potential of weakening European currencies
23.05.2022
- Chicago Fed National Activity Index
- Duke-IFO Business Climate Index
Last weekend, the U.S. dollar showed signs of strength against the euro, with the EUR/USD pair falling by approximately 60 pips from 1.059 to 1.053. However, the pair has rebounded during today’s Asian trading session. Since the rebound is being supported by the 20-period moving average on the 4-hour chart, we will closely monitor whether the upward trend continues and breaks through this month’s high of 1.064.Furthermore, since the US dollar is showing similar price action against the pound, we should keep an eye on the upside potential for the US dollar.
Among European currencies, the euro is trading in a tight range against the Australian dollar, with the EUR/AUD pair falling by approximately 170 pips from 1.508 to 1.491. Technically, the EUR/AUD pair is trading just above its 20-day moving average, and whether it breaks below the recent low of 1.488 will be the key indicator for determining whether a downtrend has begun.
Today, at 4:00 p.m. CET, Turkey’s Business Climate Survey and Capacity Utilization Rate will be released, followed by Germany’sIFO Business Climate Index at 17:00, Turkey’s Housing Price Index at 20:30, the U.S. Chicago Fed National Activity Index at 21:30 during U.S. trading hours, remarks by Bank of England Governor Bailey and German Bundesbank President Nagel at 23:15, and remarks by Atlanta Fed President Bostic at 25:00.We should be wary of further downside potential for European currencies, which are currently weakening.
Author: Keisuke Sakurai
