Caution Over Further Downside Potential for Weakening European Currencies?
23.05.2022
- Chicago Fed National Activity Index
- Germany's IFO Business Climate Index
Last weekend, the U.S. dollar showed signs of strength against the euro, with the EUR/USD pair falling by about 60 pips from 1.059 to 1.053.However, the pair has rebounded during today’s Asian trading session. Since the rebound on the 4-hour chart is being supported by the 20-period moving average (MA), we will be closely monitoring whether the upward trend continues and breaks through this month’s high of 1.064. Additionally, since the U.S. dollar is showing similar price action against the British pound, we will be watching for further upside potential in the U.S. dollar.
Among European currencies, the euro is trading in a tight range against Oceania currencies, with the EUR/AUD pair falling approximately 170 pips from 1.508 to 1.491.From a technical perspective, the EUR/AUD pair is trading just above its 20-day moving average (MA), and whether it breaks below the recent low of 1.488 will be the key indicator for determining whether it has entered a downtrend.
Today, during European trading hours, Turkey’s Economic Sentiment Survey and Capacity Utilization Rate will be released at 16:00, followed by Germany’s IFO Business Climate Index at 17:00 and Turkey’s Housing Price Index at 20:30. During U.S. trading hours, the Chicago Fed National Activity Index will be released at 21:30,at 23:15, remarks by Bank of England Governor Bailey and German Bundesbank President Nagel; and at 25:00, remarks by Atlanta Fed President Bostic. We should remain cautious about further downside potential for European currencies, which are currently trading lower.
Author: Keisuke Sakurai
