EUR/USD cannot hold above 1.0500 on risk aversion

  • US dollar strengthens amid risk aversion, DXY rises 0.30%.
  • EUR/USD trims a fraction of its recent gains.
  • EUR/CHF plummets over a hundred pips in minutes.

The EUR/USD trades back below 1.0500 as USD strengthens amid deteriorating market sentiment. At the same time, the sharp decline in EUR/CHF also weighed on the euro.

Wall Street and EUR/CHF in free fall

Wall Street’s main stock indices fell more than 2% and have trimmed the gains of the previous two days. Pessimism about the global economic outlook is back on the table and is also affected by tougher rhetoric from Federal Reserve and European Central Bank officials.

As risk aversion set in, demand for Treasuries surged. The 10-year US bond yield fell to 2.90% and the 30-year bond yield to 3.11%. The decline in yields so far prevents further appreciation of the US dollar.

The context boosted the Swiss franc and the yen, which are the best performers on Wednesday. EUR/CHF lost more than a hundred pips during the last two hours, going from 1.0480 to 1.0364 and hitting the euro. Today, the president of the Swiss National Bank, Thomas Jordan, has repeated that they are “ready to intervene in the foreign exchange markets when necessary”.

Is recovery over?

At the time of writing, EUR/USD is trading at 1.0489, daily low. The price is testing the 55 and 200 hourly Simple Moving Averages. A consolidation below should signal a possible end to the rally from the multi-year low. The next support is at 1.0435, followed by 1.0390.

To the upside, the critical short-term area to watch is 1.0525/30, a horizontal resistance and the 20-hour SMA. Above, look for the 1.0555 level and the daily high at 1.0563.

Technical levels

EUR/USD

Panorama
Last Price Today 1.0515
Today’s Daily Change -0.0034
Today’s Daily Change % -0.32
Today’s Daily Opening 1.0549
Trends
20 Daily SMA 1.0578
50 Daily SMA 1.0806
100 Daily SMA 1.1049
200 Daily SMA 1.1303
levels
Previous Daily High 1.0556
Previous Daily Minimum 1.0428
Previous Maximum Weekly 1.0592
Previous Weekly Minimum 1,035
Monthly Prior Maximum 1.1076
Previous Monthly Minimum 1.0471
Daily Fibonacci 38.2% 1.0507
Daily Fibonacci 61.8% 1.0477
Daily Pivot Point S1 1.0466
Daily Pivot Point S2 1.0384
Daily Pivot Point S3 1.0339
Daily Pivot Point R1 1.0594
Daily Pivot Point R2 1.0638
Daily Pivot Point R3 1.0721

Source: Fx Street

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