The Euro has broken down significantly during the week, slicing through the 1.09 level, an area that should have held significantly. That being said though, with the ECB looking to do more buybacks when it comes to bonds, it makes sense that the Euro continues to fall against what is without a doubt the strongest major currency in the world right now, the US dollar. Bond yields in the European Union continue to drift into negative yield territory, and that of course works against the value of the currency itself.
EURUSD analysis Video 17.02.20
Looking at this chart, you can also extrapolate the fact that the US bond markets offer a yield as yet another reason for the US dollar to continue strengthening as foreign buyers of US treasuries continue to accelerate. In a world where there is almost no yield, traders are going to be chasing that yield with abundance. Beyond that, the US dollar is a bit of a safety currency anyway, so that’s a bit of a “one-two punch” for this pair. With the European Union slipping towards recession in the future, and the United States still showing strength, this move makes complete sense.
To the downside, there is a gap at the 1.0750 level that should be interesting and should attract a lot of attention. I think at this point it’s very likely that we will go looking to fill that area. If we do break through it, that opens up a move down to the 1.06 level, and then possibly even the 1.05 level. To the upside, we would need to close above the 1.10 level on at least a daily chart to consider buying.
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