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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
FOREX
- Even though the Euro weakness in recent months has been mainly driven by the Russia/Ukraine conflict and the divergence in both yield differential and economic surprises indexes between US and Europe, the sharp contraction in Chinese ‘liquidity’ in 2021 has also been pricing in a ‘cheaper’ Euro against the USD.
- A fall in Chinese liquidity has generally been associated with a rise in risk aversion with investors seeking for 'safe' assets such as the USD.
- The chart shows how strongly China ‘liquidity’ has led EURUSD exchange rate by 6 months in recent years.
- EURUSD found support at 1.08 yesterday after consolidating sharply lower this month amid renewed geopolitical tensions with Europe preparing to impose more sanctions against Russia.
- While a ‘hawkish tone’ from the ECB today could extend the upward retracement in the short run, the Euro still faces several challenges ahead to experience a sharp MT rebound.
- Political uncertainty ahead of French elections on April 24 could also slightly weigh on the single currency in the near term.
- ST resistance to watch on the topside stands at 1.0954, followed by 1.10. On the downside, a break below 1.08 would open the door for a move down to 1.0767 (May 2020 low).
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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