Indecisive EURUSD Stuck Below 1.15

Feb. 04, 2019 4:26 AM ET
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Contributor Since 2018

Ekaterina Seredinskaya has been working in the financial markets since 1996, specializing in the International Securities and Foreign Exchange Markets. She started her career as a head of operational division in Bank Zenit, where she took passionate interest in securities market and got her certificates of the Federal Service of Financial Markets. Later she worked in widely known Lehman Brothers and Deutsche Bank at top positions where she honed to perfection her managerial skills and knowledge of financial markets.
Such a broad experience helps her in predicting economic surprises, thus serving as a good base for successful money management. In 2017, she joined the  ARUMPRO CAPITAL LIMITED team as a Chief Executive Officer focusing on strategical issues.

Summary

  • The common currency is grinding lower on Monday after attempts to break above the 1.15 barrier failed last week.
  • The labor market data didn’t give any significant support for the greenback as traders continue to focus on the Fed’s dovish shift.
  • In the short term, EURUSD could challenge the 1.1425 support if further signs of economic weakness emerge in Europe.

  The common currency is grinding lower on Monday after attempts to break above the 1.15 barrier failed last week. EURUSD has settled around the 100-DMA, unable to decide on a clear direction as a mixed US Nonfarm Payroll report puzzled the markets on Friday.  The labor market data didn’t give any significant support for the greenback as traders continue to focus on the Fed’s dovish shift. However, the euro could go lower in the medium term should the economic risks on the euro zone increase. It should be a warning signal that Italy has fallen back into recession in the last quarter as the economy shrunk by 0.2% after a decline by 0.1% earlier. By the way, it is now the third time the troubled economy has fallen into recession in a decade. In the final quarter of 2018, the euro area economy increased by only 0.2%.   As such, further deterioration in the economic data from Italy and Europe in general could put the single currency under pressure as dismal statistics will further push back ECB rate hike expectations and thus will reduce the appeal of the euro despite the dollar lags amid a more ‘patient’ Fed.  In the short term, EURUSD could challenge the 1.1425 support if further signs of economic weakness emerge in Europe. As for the 1.15 threshold, a break above is still unlikely at this stage.

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