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FOREX: Greenback Rally Extends, EURUSD Approaches Yearly Lows

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  • Renewed demand for ‘Trump trades’ on Friday extended into this week, providing further strength for the greenback during Monday’s session. The Euro has continued to show relative underperformance across G10 in the aftermath of the US election, largely owing to Eurozone growth concerns and an escalating political crisis in Germany.
  • Bearish technical conditions dominate for EURUSD, and spot has notably extended below 1.0666 on Monday, a key support for the pair. Lows of 1.0629 were traded today and this narrows the gap to 1.0611, the 38.2% retracement of the Sep ‘22 - Jul ‘23 bull cycle, just ahead of the year’s lows at 1.0601, printed back in April.
  • For EURGBP, weakness has extended today, and the cross now cleared the bear trigger at 0.8295, the Oct 18 low. An initial target includes 0.8250, the Apr 14 ’22 low and below here another major support resides at 0.8203, the Mar 7 ‘22 low.
  • The Japanese yen is the weakest performer today, with USDJPY rising 0.8% to 153.87, although we remain well off the post-election highs of 154.71. In contrast, USDCHF (+0.53%) has extended its short-term rally and printed above 0.8800 for the first time since late July.
  • In emerging markets, the likes of MXN, HUF and PLN all came under substantial pressure, declining the best part of 1.5% against the dollar. In particular the South African Rand fell 2% to a two-month low.
  • UK labour market data highlights on Tuesday, alongside German ZEW sentiment figures. Short-term focus will be on US CPI, scheduled on Wednesday.
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  • Renewed demand for ‘Trump trades’ on Friday extended into this week, providing further strength for the greenback during Monday’s session. The Euro has continued to show relative underperformance across G10 in the aftermath of the US election, largely owing to Eurozone growth concerns and an escalating political crisis in Germany.
  • Bearish technical conditions dominate for EURUSD, and spot has notably extended below 1.0666 on Monday, a key support for the pair. Lows of 1.0629 were traded today and this narrows the gap to 1.0611, the 38.2% retracement of the Sep ‘22 - Jul ‘23 bull cycle, just ahead of the year’s lows at 1.0601, printed back in April.
  • For EURGBP, weakness has extended today, and the cross now cleared the bear trigger at 0.8295, the Oct 18 low. An initial target includes 0.8250, the Apr 14 ’22 low and below here another major support resides at 0.8203, the Mar 7 ‘22 low.
  • The Japanese yen is the weakest performer today, with USDJPY rising 0.8% to 153.87, although we remain well off the post-election highs of 154.71. In contrast, USDCHF (+0.53%) has extended its short-term rally and printed above 0.8800 for the first time since late July.
  • In emerging markets, the likes of MXN, HUF and PLN all came under substantial pressure, declining the best part of 1.5% against the dollar. In particular the South African Rand fell 2% to a two-month low.
  • UK labour market data highlights on Tuesday, alongside German ZEW sentiment figures. Short-term focus will be on US CPI, scheduled on Wednesday.