Euro Benefits As Funding Currency – Sterling Under Pressure
Dear Traders,
The euro advanced as it plays an important role as a funding currency at times of market turmoil. Before rallying above 1.12 the common currency was able to gain ground above 1.1085. For the time being, we continue to expect the 1.1070/50-level to act as a current support-zone. On the upper side, next important price levels could be at 1.1260 and 1.1280. While many traders are wondering how high the euro may go, we should bear in mind, that a strong rise in the euro, much to the displeasure of the European Central Bank, brings policymakers on to the scene in order to talk down the currency. We expect verbal intervention by the ECB should the euro rise further.
The cable, however, declined towards its next important support-level at 1.4350. As long as Brexit concerns remain on the table, the currency is likely to remain under pressure. We expect increased bearish momentum as soon as sterling breaks below 1.4330/25. Lower targets could be at 1.4240 and 1.4180. A short-term resistance-zone is seen at 1.4450/65. Above 1.4475, sterling may climbs towards 1.4540.
Today we have second-tier data scheduled for release, which is expected to have only a minor impact on the currencies.
9:30 UK Trade Balance
15:00 USA Wholesale Inventories
(Timezone GMT)
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