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EURUSD Sinks To Fresh Cycle Low Below 0.9950

FOREX
  • EURUSD (-1.03%) has come under further pressure on Monday as weakness across equity markets and higher core yields strengthen the renewed bullish momentum for the greenback seen over the past two weeks. The pair is now trading comfortably back below the psychologically significant parity mark and has sunk to a fresh cycle low of 0.9926 as of writing.
  • The European energy crisis and ongoing fears regarding the growth outlook continue to act as strong fundamental headwinds for the single currency.
  • Furthermore, the technical bear trigger at 0.9952 has been breached. The next notable support resides at 0.9883, the 1.764 projection of the Jun 9 - 15 - 27 price swing while further out, scope is seen for a move towards the channel base at 0.9734.
  • The dollar index has risen 0.8% on Monday, extending above the 1.0900 mark and narrowing the gap with the July highs at 1.0929. Most G10 currencies have also fallen victim to the greenback rally, with USDCNH notably rising 0.5% on the back of China’s reference lending rates being lowered. The PBOC action prompted a much stronger showing from Aussie, which spent the majority of Monday in positive territory and despite giving up these gains, remains a relative outperformer with AUDUSD close to unchanged for the session at 0.6870.
  • USDJPY looks set to extend its winning streak to five sessions. This comes despite a slightly weaker session overnight for the pair before the overall USD bid, sparked a 100-pip bounce to 137.65 highs. The nearest objective on the topside is 137.96, the Jul 22 high.
  • Tuesday’s focus will be on the European flash PMI’s scheduled for the early European session. The market’s attention then turns to Jackson Hole and associated commentary from Fed Chair Powell at the end of the week.
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