Bearish Momentum To Accelerate?

The euro fell to a fresh low on Friday against the U.S. dollar. The psychological 1.07-barrier broke to the downside, giving way to a fall towards 1.06 and thus, a dip into oversold territory. The European Central Bank’s dovish stance laid the groundwork for the euro’s downturn while traders now expect the ECB to be the first central bank to cut rates even earlier and clearly before the Fed.


The euro dropped to a low of 1.0622 and given the strength of that latest bearish move on the one side and geopolitical tension and inflation on the other side, we expect further bearish momentum. Next lower targets (red lines) are seen at 1.0520 and 1.0450.

The greenback has regained attention after higher-than-expected U.S. inflation forced a hawkish repricing in the dollar. Also on the geopolitical front, the dollar is likely to remain supported amidst the escalation of the war in the Middle East.

The cable, like the EUR/USD has dropped sharply and the bearish move has the potential to extend.


After 1.25 broke we turn our focus to lower support areas around 1.2380 and 1.23. A break below 1.2270 could even result in a dip towards 1.22. On the upside, the area around 1.26 could now act as a resistance.


The highflying index has corrected. A crucial support could come in at 17600-17500 from where buyers may jump back in. The general uptrend remains intact as long as the DAX oscillates above 17000.

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