By ForexTime
Euro bears went on a rampage today, dragging the EURUSD to levels not seen in 20 years as traders cut bets on European Central Bank (ECB) rate hikes!
The heavy sell-off was triggered by soft economic data from France which not only darkened the already gloomy outlook but fanned fears of a recession in Europe. With ongoing geopolitical tensions obstructing the ECB’s ability to aggressively raise rates like the Fed, the widening interest rate differentials could fuel the EURUSD selloff.
According to Bloomberg, there is now a 60% chance of the parity dream becoming reality by the end of 2022. The last time the EURUSD was parity was back in the first trading week of December 2002.
Before we take a dive into the technicals, it is worth keeping in mind that the euro has depreciated against most G10 currencies today. With the fundamentals swinging in favour of bears, euro weakness could become a key theme this quarter. Although the EURUSD remains our focus, the latest selloff could present fresh opportunities across other euro crosses.
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EURUSD breaches critical support…
The EURUSD has cut through the 1.0350 support like a hot knife through butter.
Prices are heavily bearish on the daily charts as there have been consistently lower lows and lower highs. Bears have a lot of freedom below 1.0350 due to the absence of any key support levels. The next level of interest can be found at 1.0200 and 1.0000. If prices are able to push back above 1.0350, then the EURUSD could retest 1.0480.
EURJPY approaches 50-day SMA
After failing to conquer the 144.00 resistance level, the EURJPY could be experiencing a bearish reversal with the breakdown under 141.50 signalling further downside. A weaker euro could drag the EURJPY towards the 138.00 support level. Should bears secure a strong daily close under this point, the next level can be found around 134.50.
EURGBP choppy as ever…
There was some action on the EURGBP as prices spiked below the 0.8580 support level before pulling back higher. This currency pair remains a battleground for bulls and bears. Although the overall trend point north, resistance can be found around 0.8680. A daily close below 0.8580 may encourage a selloff towards 0.8500 and 0.8440.
EURAUD wobbles above support
The EURAUD could be gearing up for a breakdown below the 1.5150 support.
It’s been trapped within a range over the last 2 weeks with the pressure growing by the day. Yesterday’s bearish candle suggests that a selloff could be around the corner with 1.5150 acting as the gatekeeper. A breakdown below this level may open the doors towards 1.4900 and 1.4770. Should 1.5150 prove to be reliable support, a move back to 1.5300 could be on the cards.
Article by ForexTime
ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com
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