Euro exchange rate: Currency caught in a bear channel vs USD; FX-land dominated by weaker equity markets

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Category: US Dollar Exchange Rate

Published on Thursday, 16 February 2012 14:42

Written by Will Peters

Euro exchange rates (Currency:EUR) have failed to extricate themselves from morning lows as we head into this afternoon's US trading session. The euro dollar exchange rate (EURUSD) is at 1.3106, the euro pound exchange rate (EURGBP) is at 0.8293.

As an exchange rate note from TD Securities suggests, much of the focus will remain on the stock markets, which are not looking too sharp at present.

"The EUR has ground lower in the overnight session (Europe's morning session), extending yesterday’s losses in the absence of any positive developments on the Greek deal," say TD Securities.

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EUR/USD has essentially moved in a straight line from the top to the bottom of its short-term bear channel.

"Intraday, we may see a bit of a breather from the one-way move lower, but resistance near 1.3030 should be sufficient to hold gains without any significant, positive headlines from the euro zone. On the downside, support is spotted at 1.2970 and 1.2930, before stronger support near 1.2880/90," says the exchange rate note from the Canadian bank.

With few headlines and only minor data, the overnight session extended yesterday’s pessimistic tone, with softer equities, higher equity volatility, predominantly wider euro zone sovereign spreads, and weaker commodities.

"In FX land, this means weaker risk currencies generally, but the strongest trend is broad USD strength. The JPY, however, has not benefited as it typically had been during risk-off sessions during the fall," say TD Securities.