Today, on May 28th, the common European currency keeps losing its value against the US Dollar. At this point, the price is down by 0,07% after EURUSD set another 3-month low at 1,3612.
The list of bearish drivers includes market expectations (concerning the ECB's intention to continue the monetary easing) coupled with stronger European stock indices and positive economic figures from the USA.
Today's major economic events include May's German labor market figures, April's eurozone M3 money supply change and the eurozone's business client and sentiment, Market Leader reports.
As we have just mentioned, the common currency is still developing yesterday's tendency aimed at losing its value against the US Dollar. The price dropped down to the lowest level in 3 months - 1,3620. We must confess, EURUSD has come a long way down since May 8th (1,40).
Some experts believe that the EURUSD started going sharply down because the factors supporting the common currency suddenly disappeared. Still, the ECB is still considering the near-term fate of its QE program. So, EUR is still relatively strong versus USD.
At the same time, eurozone bonds that suffered from the global crisis stopped brining decent profits seen in 2012-2013. This happened due to tiny yields as the overall economic situation in the eurozone improved radically.
As investors stop investing money in peripheral eurozone bonds, the eurozone's surplus is melting. So, Mario Draghi hinted at the likelihood of the ECB continuing the quantitative easing started previously. At the same time, the central bank cut short-term interest rates, thereby pressing a strong Euro.
Another factor that prevents the common currency form going further down is the fact that th Fed is probably not going to taper QE3 any further in the near future. However, if the ECB gets down to another round of QE coupled with other easing measures amid the Fed's tapering, this may well exert extra pressure on the common currency, thereby dropping it further down against the US Dollar.
EURUSD
According to Masterforex-V Academy, EURUSD is going down, which indicates the current strength of the American currency against its Europrean counterpart. The H1 chart of EURUSD indicates a bearish tendency, which started on May 19th from the local high of 1,3733. The latest downswing was completed around the local low of 1,3612. The downtrend is marked blue in the chart below.
Today, on May 28th, EURUSD is consolidating within the scope of the 1,3612-1,3638 price range while it is trying to decide on the direction of the forthcoming trend.
A move outside the range will prompt the direction of the future tendency.
A break below 1,3612 will give way to 1,3561 – Feb's low. The scenario is represented by the blue arrow.
Alternatively, if the price continues the bullish reaction, we are likely to see a move above the top of the range. If this is the case, the price may encounter resistance at 1,3699 and 1,3688. This move may question the mid-term downtrend. The scenario is represented by the red arrow.
The Binary Option Department of Masterforex-V Academy recommends going short (buying put options) when the price is close to 1,3638. The lifetime is up to 2 hours.
