Market Analysis

EURUSD: 200-week Moving Average To Prove Influential?

EURUSD may have traded sideways during Friday’s Asia but chartists will have noted that even as the euro rallied versus the US dollar yesterday, it couldn’t get back above the highs of 1.1429-33 seen at the start of the week. Add in the facts that the spread between benchmark 10-year German and Italian government bonds remains pronounced and that US Treasury Secretary Stephen Mnuchin said yesterday that further US sanctions could be imposed on Turkey and traders in Europe might rationally conclude that the upside for EURUSD is again limited. With talk among traders of substantive option expiries on Friday (1500h UK time) at 1.1400-05 (IFR have reported 1.1 billion euros of expiries in that 5 pip range) the currency market might see that level as a natural top ahead of expiry time. But what might be more important from a technical perpsective is whether EURUSD closes in New York tonight above or below the 200-week moving average which IFR has calculated as 1.1359. Chartists may well be keeping an eye on that. And finally, at a macro-level, given that US President Donald Trump has previously expressed misgivings about the value to the US economy of a strong US dollar, currency traders might think it also worth noting a slight change in the mood music emanating from the US President. In a tweet on Thursday, Trump noted, with apparent approval, that “Money is pouring into our cherished DOLLAR like rarely before.”

by Neal Kimberley, External Currency Analyst.