EUR/USD at fresh highs of 1.1361, loses momentum amid risk aversion

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  • The US dollar is mostly higher across the board due to risk aversion.
  • The euro gains support from the rally against the pound.
  • EUR/USD is heading for weekly losses and still remains in the previous range.

The EUR/USD is rising on Friday, and after the start of the American session, it reached a high of 1.1361 and then pulled back. The US dollar is posting mixed results overall, heading into the weekend.

The upside lost momentum amid risk aversion. Stock prices on Wall Street are falling again, with the Dow Jones down 0.42% and the Nasdaq down 1.52%. The negative tone is boosting Treasuries. 10-year yields stand at 1.74%, while the 30-year yield is at 2.06%, both at one-week lows.

The US dollar benefits from the negative sentiment. The upside finds some limit amid lower US yields. The prevailing tone is risk aversion so far.

The euro is showing strength in the market and the Swiss franc and yen are among the best performers. EUR/GBP is rebounding strongly from two-year lows and is trading at 0.8375, having the best day in months, offering support for EUR/USD. Recently released data showed that the euro zone consumer confidence index decreased from -8.4 to -8.5 in January.

Despite Friday’s gains, EUR/USD is poised to end the week lower. It still remains below the 20-week simple moving average at 1.1480. Next week, the key event will be the FOMC meeting. The Fed is expected to open the door to a rate hike in March.

EUR/USD is back in the previous consolidation range of 1.1370/1.1220. If it manages to rise back above 1.1370, the outlook would improve. On the downside, a break below 1.1300 should clear the way for more losses and a test of 1.1270.

Technical levels

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