Euro-dollar reached a nine-month low last week amid the relative hawkishness from the Fed, growing likelihood that the ECB might pause hiking and lacklustre PMI from the eurozone. Philip Lane, the ECB’s Chief Economist, specifically commented that pressure on inflation from pay hikes is starting to subside.
Euro-dollar’s downtrend is clearly still active but consolidation and possibly a small bounce seem favourable before another significant leg down. May’s intraday low around $1.06 hasn’t been broken yet and the area of the 100% Fibonacci retracement based on 2020’s strong uptrend is still in view. Oversold conditions have also been dominant over the summer. Traders highlighting the death cross of the 50 SMA from Bands below the 100 and 200 SMAs as evidence for negativity might do well to wait for an entry higher or use a sell limit, derisking the trade somewhat compared to entering around the current extreme.
Euro-dollar’s downtrend is clearly still active but consolidation and possibly a small bounce seem favourable before another significant leg down. May’s intraday low around $1.06 hasn’t been broken yet and the area of the 100% Fibonacci retracement based on 2020’s strong uptrend is still in view. Oversold conditions have also been dominant over the summer. Traders highlighting the death cross of the 50 SMA from Bands below the 100 and 200 SMAs as evidence for negativity might do well to wait for an entry higher or use a sell limit, derisking the trade somewhat compared to entering around the current extreme.