It used to be that a risk-off trading environment meant a rush to buy US Dollars as the ‘safe haven’ currency.
Not so much any more.
For the first time since early November, the Euro is worth more than USD $1.10, as a very jittery market continues to dump commodities (in particular oil)Â and equities, and the Euro continues in quite the opposite direction.
Saxo Bank Head of FX Strategy John Hardy had the following to say earlier today:
Yesterday, the USD showed pockets of resilience, but today the greenback failed on all fronts, even against the recently weak commodity currencies, as risk appetite weakened sharply again into the early US trading hours, with EURUSD trading within a few pips of 1.1000 (as of this writing), while USDJPY range support at 122.25 gave way without much of a fight.
The technical implications for the US dollar are not yet critical, and we still have yet to see the outcome of next Wednesday’s Federal Open Market Committee meeting, but the greenback needs to make a stand here soon or risk further technical damage and it is always difficult to interpret technical developments when they unfold ahead of a critical event risk.
The local resistance provided by the highs late last week after the European Central Bank shocker have been tested today, with the zone up to the psychologically important 1.1000 level and towards the 200-day moving average are the last resistance ahead of perhaps 1.1100, with that latter level likely to fail as well if risky assets don’t bounce soon.
EURUSD past month. Source: XE.com.