Article by ForexTime
The EUR/USD made a lower low on Thursday retracing its recent gains through trend line support as the dollar gained broader stregnth against most major currencies. ECB member Praet said that disinflation risks were increasing. This was followed by a 1.7% decline in German import price inflation, with prices down 0.7% month over month, driven by lower energy prices. The potential need for further ECB accomodation is making its rounds through the capital markets eroding the value of the Euro.
There had been market speculation during the recent market turmoil that the ECB could expand QE. EUR/USD logged a six-day low at 1.1275 and there continues to be risk to the downside.Support on the currency pair is seen near the 20-day moving average at 1.1133, which coincides with an upward sloping trend line that comes in at the same level. Yields differentials are starting to favor the dollar as yields in the U.S. are beginning to climb again. The currency pair is beginning to consolidate in a large range which is reflected by the relative strength index which is printing a reading of 55, which is in the middle of the neutral range.
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