Breaking: EUR/USD plunges below 1.11, three reasons and levels to watch
|EUR/USD has hit a new low at 1.1090, crashing some 240 off the highs.
Here is why and levels to watch.
1) Trump-ed
US President Donald Trump has failed to impress investors by refraining from announcing fiscal stimulus in the wake of the coronavirus crisis. That sent markets tumbling down and added to fears.
The euro was especially hit by the president's announcement that flights to and from Europe are canceled.
2) Lagarde's misstep
Negative interest rates are hurting banks' profits and are unhelpful to the economy. The European Central Bank's decision to leave rates unchanged and only to add QE and new loans makes sense. The euro initially advanced in response to these measures, combined with some German readiness to spend.
However, answering a question, ECB President Christine Lagarde said that the bank is not there to control spreads. With Italy ratcheting up expenditure, her lack of commitment triggered a sell-off of Italian debt. The spread between the eurozone's third-largest economy's BTP's and German bunds widened,
And that weighs on the euro.
3) Rush to the dollar
The greenback's previous spells to the downside were accompanied by falling yields. However, investors may have exhausted this trade, with returns falling to extremely low levels.
Moreover, money is rushing to the safety of the US dollar from all over the world – emerging markets, gold holdings, and even Bitcoin. The traditional safe-haven such as the yen and the yellow metal are in decline alongside stocks – a rare feat which is evidence to the greenback's strength.
EUR/USD Levels
Euro/dollar has dropped below the 50 Simple Moving Average on the four-hour chart.
The next levels to watch are 1.1050, which was a swing high in late February, followed by 1.0950, a swing low from the same time. Next, we find 1.0880, a cap from beforehand.
Resistance awaits at 1.1160, followed by 1.1215, 1.1250 and 1.1360.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.