ING sees oil and US data as downside risks, while JPMorgan’s overbought-Dollar warning leaves room for a Euro rebound.
ING and JPMorgan identify almost identical downside support for the Euro to Dollar (EUR/USD) exchange rate, but neither treats a fresh sell-off as inevitable.
ING places the next important zone at 1.1320-1.1330, while JPMorgan highlights 1.1330 and sees signs that the Dollar’s advance is becoming stretched.
JPMorgan’s Friday assessment struck a cautious tone:
“No real bias here but with the DXY in overbought territory (RSI closed above 70) I would be a better buyer here for choice”
The desk’s preference reflects a short-term momentum signal, with no assurance that the Dollar has peaked.
EUR/USD finished Friday at 1.1393, up 0.16% on the day but down around 0.8% over the week.
The recovery still left it below the 1.140-1.142 valuation area ING highlighted earlier in the week.
ING’s Francesco Pesole explains what could drive another decline:
“We still view the 1.1320-1.1330 area as the next key support for EUR/USD. We could reach that level quite quickly if oil prices take another sharp leg higher and/or US data surprises to the upside over the next couple of weeks. For now, we do not think new lows are imminent, but downside risks persist.”
In its latest assessment, ING argues that the global bond sell-off has supported Dollar demand by unsettling investors.
It also sees French fiscal concerns offsetting some of the Euro’s support from resilient economic data, noting a 110-basis-point gap between French and German ten-year yields.
The banks’ support area remains roughly 63-73 pips beneath Friday’s close and has not yet been tested in this decline.
JPMorgan’s nearer resistance at 1.1400 leaves the Euro’s initial recovery test just above its closing level.
Our currency coverage draws on live market data, official economic releases and published bank research.
