Summary:
- EUR/USD could be moving toward a potential further fall.
- EUR/GBP.
- GBP/USD may see further losses this week.
EUR/USD falls below parity
The market is reflecting bearish signals for this currency pair. Testing below the parity handle, the EUR/USD is moving toward a potential further fall. Sellers have pushed hard to allow for another move-below since this level came back into play just after the Euro start this morning. Whether it can go on is the key question. Euro bears have returned for another battle at the parity handle of EUR/USD, drawing like moths to a flame. It took almost six months for this price to finally give way when it was last in action, in the second half of 2002. This is a significant psychological level. This really illustrates the influence of psychological factors as well as the significance of emotion in the market. Inflation is rampant in the Eurozone, and the ongoing conflict in Ukraine makes problems of economic policy, notably in the area of energy, more complicated. The question is whether we're approaching an abnormal market climate.
EUR/USD Price Chart
Pound sterling loses against the Euro
The market is reflecting bullish signals for this currency pair. Late last week, despite official data that suggested retail spending held steady in the face of high inflation in the UK and another spike in investor expectations for Bank of England (BoE) interest rates, the pound lost ground against the euro. Friday's losses occurred as a result of the Dollar gaining and investors' declining risk appetite putting significant pressure on Sterling and other currencies. This prevented the Pound from benefiting from a sharp increase in UK government bond yields that was happening in the background.
EUR/GBP Price Chart
GBP/USD could fall further this week
The market is reflecting mixed signals for this currency pair. A busy U.S. economic calendar or comments from Federal Reserve (Fed) officials might cause U.S. bond yields and the Dollar to rise even further on a burgeoning comeback, further damaging the Pound to Dollar exchange rate, which collapsed last week. Better than anticipated UK economic data and a sharp rise in market expectations for interest rates at the Bank of England (BoE) last week did not help the pound sterling, and it frequently appeared to be the most vulnerable among major currencies to rising U.S. bond yields and a rally in the dollar.
GBP/USD Price Chart
Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
