‘The exchange rate is more or less the result of the monetary policies and the different cyclical positions on both sides of the Atlantic.’ – Jens Weidmann, Bundesbank (based on Bloomberg)
Pair’s Outlook
On Wednesday morning the common European currency was squeezed in by two simple moving averages against the US Dollar just above the 1.06 level. The 20-day SMA was providing support from the downside at 1.0604 level, and the 55-day SMA was putting up resistance to the currency exchange rate at 1.0621 level. It is most likely that the support level will be passed and the rate will continue lower to the first weekly support level, which is located at the 1.0566 mark. Such a move would be consistent with the Federal Reserve announcing a rate hike later in the day.
Traders’ Sentiment
SWFX trader sentiment remains bearish, as 54% of all open positions remain short. Meanwhile, 58% of trader set up orders are set to sell the Euro.
