The EURUSD pair experienced a significant sell-off recently, responding to the risk-averse attitude dominating the current financial climate. With investors flocking to safer alternatives, the Euro has depreciated against the US Dollar, causing concern amongst traders and leading to further sell-offs.
The US Dollar, traditionally deemed a safe haven in times of economic uncertainty, is enjoying increased demand. This is in stark contrast to the Euro, which continues to weaken amid ongoing market instability. Traders are advised to stay vigilant in these unpredictable economic times and follow the market trends closely.
The USD has risen notably on the back of influential data, triggering a sizeable incline in long-term Treasury yields. This is supported by the strong labor market performances and confidence in trade negotiations. However, traders must remain cautious of potential volatility brought about by ongoing political events.
Despite the USD strength, the EUR has shown a consistent upward trend against the USD, mostly due to Dollar weakness and the resulting risk-on sentiment.
Euro’s depreciation amid investor uncertainty
The Eurozone shows promising progress, but the US struggles with geopolitical tensions and lingering pandemic impacts.
The EURUSD failed to breach the major 1.09 threshold, selling off into the 1.08 category after US data release, reflecting a bearish trend. Although key support levels at 1.07 have not been breached yet, further depreciation is anticipated if US economic indicators continue to outshine those of the Eurozone.
Analysis shows the EURUSD retreating around the 1.0812 mark on a 4-hour timeframe. Traders expect an initial rejection and a fall to the 1.0727 mark, although an upswing cannot be ruled out. This could present a potential profit opportunity for swing traders, but a failure to sustain above the 1.0812 might force the pair back into the 1.0727 zone.
Resistance is evident at the 1.0812 mark on an hourly timeframe. If sellers take control at this point, the market could trend towards the 1.0727 level, unveiling a prime opportunity for traders interested in short-term profits.
Upcoming market triggers include the announcements of the Eurozone Unemployment Rate, US Jobless Claims numbers, Eurozone Flash CPI, and US PCE statistics. These events will offer insights into the health of both economies and are likely to cause market volatility. These developments must be closely watched by traders.
