The EUR/USD pair has seen some significant drops yesterday amid a strengthening of the US dollar caused by a rise in Treasury yields. Today’s morning has brought more disappointment for the euro after the release of German trade balance. Support is set at 1.22, resistance at 1.23.
The greenback strengthened significantly. This may be seen not only on the EUR/USD rating, but also on the dollar index, measuring its strength against six major currencies. The index has reached 90.40 level on Wednesday, highest in two weeks. According to analysts, the euro has been too strong lately, with too many expectations for the European Central Bank early monetary policy normalization.
The EUR/USD pair continues the correction that started last Friday. Temporary rebounds were possible due to short-lived drop of the greenback, caused by high volatility and drops of the biggest indices in the US. In effect, the correction wasn’t immediate, but the direction of the pair seems more than clear.
The euro was already week at the start of the week after Friday’s nonfarm payrolls have significantly surpassed the market expectations, reflecting strength of the US economy. A rise in average wages was also crucial as it was anticipated by the markets for quite a time. In effect, markets are almost sure that the Fed will proceed with further rate hike this year.
Pic.1. EUR/USD chart.
The EUR/USD continues the correction seen since the beginning of the week. The economic calendar is nearly empty today and the greenback seems to be highly favoured by the markets, so any short-term rebounds should be considered as an opportunity to open PUT options.