Euro Rates Draw Back to Almost 1.06

The euro rates have been declining consistently against the US dollar starting on Monday. At the current point, the EUR/USD currency pair has lowered to around $1.066 as of Tuesday and continues to fall. So, the main reason for this is likely the strengthening of the US dollar.

With the improvement in the standing of the Greenback, we have seen the US dollar index push up to around 105.7. There could be several reasons for this change, but we can identify one major change. Traders are getting cold feet, retreating to the dollar, and, for now, are not pursuing investment. So, such traders will not buy euros for the time being. We can see that the slackening in Chinese trade has been a major contributor to this slowdown.

The rise in bond yields in major economic centres like Germany and the US has accompanied this decline in Chinese trade.

America’s central bank, the Federal Reserve, has been showing concrete signs that it plans to hold back for the foreseeable future. They have not indicated any plans to make any more rate hikes in the coming months. There had previously been worries about a December rate hike, but such concerns have passed. Non-farm payroll data has reassured the Fed that taking action is unnecessary for now.

The previous peak for the EUR/USD pair meant you could sell euros at $1.075, but this level seems to have quickly faltered. The 200-day SMA stands at around 1.0805, and while the pair stays below this level, analysts expect a bearish mood.

The resistance point to look out for will possibly be a high of $1.1064, which we saw in August. As for a bottom point, we could see a low of around $1.040. This is near the lowest point in the year of $1.0448 for euro rates.