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Euro Flirting with Near-Term Downtrend

Summary:

North American traders began the week by selling dollars.

Euro is testing a downtrend off the year’s high.

DXY is testing its uptrend.

 

After consolidating in the Asian session and European morning, the euro has been bid higher in North America.  It is testing a downtrend line, drawn off the year’s high set in early August near $1.1910, as depicted in this Great Graphic, composed on Bloomberg.

It is met the 50% retracement objective near $1.1785 today.  The 50% retracement is pegged at $1.1815.

There does not appear to be a new fundamental driver of the move.  We suspect that North American participants are more dollar-negative than many foreign investors presently.  Near the end of the European morning, the dollar was higher against nearly all the major and emerging market currencies.  Now it is down across the board, including most of the emerging market currencies.

Many economists seem to think that Cohn is the most likely to succeed Yellen at the helm of the Fed.  This is not the unalloyed good that some may have thought at the end of last week.  If Cohn does move over to the Fed, it may leave a disturbing vacuum in the White House.  Treasury Secretary Mnuchin is not seen having the saving market gravitas.

The Dollar Index is just above it uptrend line, also drawn off the August 2 extreme.  It is seen near 93.15 today, which is also the 61.8% retracement of its bounce from earlier this month.

 

EUR/BGN

EUR/BGN

- Click to enlarge

 

Full story here
Marc Chandler
He has been covering the global capital markets in one fashion or another for more than 30 years, working at economic consulting firms and global investment banks. After 14 years as the global head of currency strategy for Brown Brothers Harriman, Chandler joined Bannockburn Global Forex, as a managing partner and chief markets strategist as of October 1, 2018.
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