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EURUSD remains vulnerable
Forex
11/14/2018

EURUSD remains vulnerable

It looks like the dollar demand is back after yesterday’s correction, with EURUSD is under a bearish pressure again, while the pound seems to be losing its Brexit-related enthusiasm.

It looks like the dollar demand is back after yesterday’s correction, with EURUSD is under a bearish pressure again, while the pound seems to be losing its Brexit-related enthusiasm. Despite the fresh headlines from London could yet fuel another sterling rally, a wider picture shows that the greenback remains strong, mainly due to monetary policy divergence.

The euro rallied against the USD on Tuesday but failed to regain the 1.13 figure which confirms that the European currency stays rather unattractive for buyers because of budget issues in Italy and more signs of slowing growth in the euro area. As such, the Q3 German GDP contracted 0.2% vs. -0.1% expected. That's the weakest quarterly growth since Q1 2013 and another argument against a rate hike by the ECB.

Another bearish factor for the European currency is the prevailing risk aversion in the global financial markets. There are still a number of risks including trade wars, Italy, Brexit, slowing global growth and falling oil prices. The latter is the strongest drag on risk sentiment right now. So should crude oil prices fail to shift to a recovery mode any time soon, the euro could get under additional pressure.

Technically, EURUSD needs to firmly regain the 1.13 threshold in order not to challenge the 1.12 support in the days to come.

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