EUR/USD moves towards the lows
We are seeing signs that the market wants to test the EUR/USD lows at 1.1110. There will be some strong support at these levels, so based on the price action seen so far, we will need to see a little more conviction if we are to break these lows and extend towards what will be much tougher levels ahead of 1.1000. Indeed, 1.1000-50 is touted as a very strong area and some believe this may well end the downturn in the spot rate.
At the same time, this would push the DXY - the USD index - into the key 0.9850-0.9900 resistance zone, so USD longs will have a battle on their hands, having seen one-way traffic through most of this year.
Indeed, the USD is pushing up against the rest of the pack, where Cable is again looking to put in a test on the earlier lows seen ahead of 1.2600. London markets had a go early on but met with strong demand, yet North American desks will look to apply fresh pressure unless EUR/GBP gives up ground.
AUD, NZD, and CAD are also pushing towards their recent lows, most notably the CAD with heavy losses in Oil prices adding tailwinds to the move which put another 1.3500+ push back on the table. AUD/USD support to watch for lies at 0.6830 while NZD/USD is trading a narrow range with a view to testing 0.6470.
USD/JPY and USD/CHF are also modestly higher, but if the risk mood sours when Wall Street opens, then we expect these pairs to drop off also.