As global financial landscapes shift, the EUR/USD is on a two-day downtrend, registering a new one-week low near 1.0930 early on Monday in Europe. South African investors, with significant interests in international markets and the Eurozone, are carefully observing this trend as it could have implications on trade and investment strategies.
The current state of the Euro shows a continuation of the previous week’s trend, wherein it deviated from a support-turned-resistance trendline that originated in late May. This deviation is now challenging both a crucial short-term support and the 100-Day Moving Average (DMA). Several factors are contributing to the Euro’s decline against the US Dollar, including negative MACD indicators, heightened market caution, and notably, the robustness of the US Treasury bond yields.
For the bears in the EUR/USD market to truly capitalize and target the monthly low of approximately 1.0910, they would require a daily close below the 100-DMA support, which is currently at 1.0930.
Other pivotal barriers on the downside include the 61.8% Fibonacci retracement from the May-July upward trajectory, positioned near the 1.0880 mark. Additionally, the previous month’s lowest point at approximately 1.0835 acts as a significant threshold.
Conversely, should there be a daily closure above the upward trending support line from July 06, we could see an attempt to breach the support line that held for several days, now around 1.1040.
Beyond this, Euro enthusiasts would then be eyeing the monthly high of roughly 1.1065 and the notable 1.1100 mark. A continued bullish momentum could even aim for the annual zenith achieved in July, which stands near 1.1275.
Given the intertwined nature of the South African economy with global markets, understanding these nuanced dynamics in the EUR/USD space is crucial for local businesses and investors who operate or invest internationally.