- EUR/USD has rallied through the 1.13 handle in thin liquidity in Asia as the dollar slides further.
- EUR/USD has followed sterling overnight but the dollar and thin liquidity is ultimately to blame for this move. The DXY is now below the 97 handle.
EUR/USD was struggling in European trade following the plunge in ZEW with ZEW expectations arriving at -24.1 beating the -25 forecasted but hardly changed from the -24.7 while current conditions were plunging from 70.1 to 58.2 and below the 65 forecasted. Bears are looking for a test below the 1.12 handle but there was a strong reversal in the euro during the NY session and the price rallied from 1.1253 and through the 1.13 handle in early Asia as the greenback lost more traction in thin trade. A pre-Tokyo open of 1.1320 was made.
EZ woes to cap bullish attempts:
For the Eurozone, an old saying by Ben Bernanke rings a bell: recoveries don’t die of old age. However, they can definitely lose momentum. Analysts at ING Bank explained that the discussion between optimists and pessimists is getting fiercer. Recent developments have sparked uncertainty about the length of the expansion in the Eurozone as confidence among businesses and consumers has been hit by concerns about a trade war, Brexit, higher oil prices and emerging market turmoil. "This does not necessarily mean that the economy is set for a severe decline. The investment environment remains favourable with low borrowing rates, eased credit standards and high levels of capacity utilisation. Consumption continues to profit from lower levels of unemployment and cautious increases in wage growth."
EUR/USD levels
There is very little of significance on the 1.13 handle and it is only until the pair gets to the downtrend channel resistance line at 1.1460 where things can get interesting. Bulls could then look to target the 1.1432 early October low. "While the cross remains below the current November high at 1.1500 we will retain a medium-term bearish outlook," analysts at Commerzbank argued. The long-term pivot line was tested at 1.1258 and a break there again opens prospects for the 61.8% Fibonacci retracement of the 2017-18 advance at 1.1186. " Failure there will put the late May and June 2017 lows at 1.1119/10 on the cards," the analysts at Commerzbank argued.
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