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Sep 14 - 08:55 AM

EUR/USD - COMMENT-Three Reasons Why EUR/USD Will Likely Fall

By Martin Miller  —  Sep 14 - 06:55 AM

There are three reasons traders should expect a EUR/USD slump in coming sessions: the gap in central bank policy rates, the bearish daily chart and negative September seasonality.

The Federal Reserve remains way out front in terms of having the highest policy rates among major economies, with exception of the Bank of England.
Markets are pricing a 65% chance of a European Central Bank 25 bps rate hike on Thursday. Even if the ECB does hike, its policy rates will remain well below that of the Fed, which in turn should exert downward pressure on EUR/USD.

EUR/USD's overall bias is for an eventual drop through the May 1.0635 (EBS) low.
However bears need to overcome the 1.0669 Fibonacci level, a 76.4% retrace of the 1.0482 to 1.1276 (2023) rise, that recently limited losses.
Fourteen-day momentum remains negative, reinforcing the overall bearish bias.

EUR/USD's performance for each September since 2000 shows it has dropped in 14 of the last 23 years, including the last six, highlighting a possible in-built structural downside bias.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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