Breaking News
0

Will EUR/USD Break 1.10?

By Kathy LienForexAug 16, 2019 03:39PM ET
www.investing.com/analysis/will-eurusd-break-110-200455966
Will EUR/USD Break 1.10?
By Kathy Lien   |  Aug 16, 2019 03:39PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Kathy Lien, Managing Director Of FX Strategy For BK Asset Management

Daily FX Market Roundup August

It has been a great week for the U.S. dollar, which recovered against all of the major currencies with the exception of sterling, which coasted on stronger UK data. The dollar’s rally was driven primarily by better-than-expected U.S. data. Retail sales doubled expectations while year-over-year CPI growth edged closer to the central bank’s 2% target. These reports validate Fed Chairman Jerome Powell’s recent comments about the economy’s resilience and his positive assessment of the labor market. What it doesn’t do is reduce the chance of easing. Fed fund futures are still pricing in 100% chance of a quarter-point rate cut next month so it will be very difficult for dollar bulls to remain in control. Thus far we haven’t heard many Federal Reserve officials say that a rate cut is coming. Typically, when the Fed’s guidance is misaligned with market expectations, they become more vocal and in this case, they could be holding off until Jackson Hole.

The Jackson Hole summit would be the perfect venue for the Federal Reserve to set or reset market expectations. A number of Fed officials will be speaking including Chairman Powell on Friday. When we last heard from the central bank, it made little mention of the need for further easing but given all of the developments since July, its language could/should change. If the Fed is committed to lowering interest rates in September, we should hear central bankers downplay the improvement in spending and retail sales. Some may even overtly press the case for easing, which would be very negative for USD/JPY and USD/CHF. However if the bank emphasizes the uptick in data, the dollar could soar on the notion that it might delay a rate cut.

The worst-performing currency was the euro, which sold off 4 out of the last 5 trading days against the U,S. dollar. Economic data has been mostly weaker with the economy contracting in the second quarter, investor sentiment (as measured by the German ZEW survey) hitting its lowest level since 2010 and industrial production falling by the steepest amount since November 2019. Eurozone PMIs are scheduled for release and there’s a very good chance that these numbers will come in softer, building the case for EUR/USD to break 1.10. However the euro found support at the end of last week from one important headline about the German government preparing to boost government spending if the economy falls into recession. The German economy grew in only one of the past 4 quarters, so recession is certainly in the realm of possibility. Fiscal stimulus would help a lot but it may be months before the German government announces any new spending measures. The ECB will ease before then and how the euro trades will depend on the extent of its stimulus.

Will EUR/USD Break 1.10?
 
Will EUR/USD Break 1.10?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments
Tèo Phan
Tèo Phan Aug 18, 2019 10:40AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
thanks!
Faisal Amman
Faisal Amman Aug 18, 2019 3:40AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Buy usdjpy couldn't break 105 :)
mani kumar
mani kumar Aug 17, 2019 3:55PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
downtrend....?what the reason of ur confidence about it
Oluwole Soremekun
BullBearMkt Aug 17, 2019 9:02AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Great article Kathy. However, from my analysis (as shown in this chart: (https://www.tradingview.com/x/QxKvBlwv/), the close on Friday makes the pair not likely to break the 1.10 level at least for the next couple of day.  Price already creating demand zone between 1.10654 and 1.10939. I expect rejection when price attempts to retest this zone on Monday which will then possibly drive the pair close to 1.11970. If this happened, then breaking 1.10 level could be a mirage....However, if price violates 1.10269 level, then we will possibly see EURUSD below 1.10 moving faster...
Charles Brooks
Charles Brooks Aug 17, 2019 9:02AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
does the fact it closed out below 1.1110 make a difference? i was reading an article posted previously that stated if EUR/USD closed below 1.1120 then it would most likely continue to downtrend next week.
Uz IL
Uz IL Aug 17, 2019 12:36AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Very good, thanks Kathy! :-)
Partap Singh
Partap Singh Aug 17, 2019 12:00AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
thank you Kathy
Shrinivas Gujar
Shrinivas Gujar Aug 16, 2019 9:36PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
as always your articles are amazing
Lokman Hossain Hossain
Lokman Hossain Hossain Aug 16, 2019 9:26PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
good artical for all EUR/USD traders..
Sky Chong
Sky Chong Aug 16, 2019 8:54PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Good
Bob Le
Bob Le Aug 16, 2019 8:21PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
A very good article as usual. ok
Bob Le
Bob Le Aug 16, 2019 8:14PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
"industrial production falling by the steepest amount since November 2019"?
Chee Tah
Chee Tah Aug 16, 2019 8:14PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
very good analysis. thanks
Ronniqua Walker
Ronniqua Walker Aug 16, 2019 5:37PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Yea
ET Elliott
ET Elliott Aug 16, 2019 4:10PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Great article!
Raymond Opoku
Raymond Opoku Aug 16, 2019 4:09PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Hello Kathy, I love your analysis on currencies; how I wish you could accompany it with charts.
Tarek Dib
Tarek Dib Aug 16, 2019 4:06PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
And eur chf 1.4
Tarek Dib
Tarek Dib Aug 16, 2019 4:03PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Yen to 140 vs usd remmberd it used to be 220
Joe Bucks
Joe_Bucks Aug 16, 2019 4:02PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Kathy you are the best! We are going to parity. No one, even king Trump, cant stop it
Tarek Dib
Tarek Dib Aug 16, 2019 4:01PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
It will break 1 in december
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email