EUR/USD Forex Market Heads for New Low
- Euro Selling Continues Despite More Positive Turn
- GBP Also Struggling to Attract Buyers
- Optimistic Opening From US Markets
Buyers are still finding it extremely difficult to own the Euro or Pound in the current market climate. The Dollar forex market has remained strong throughout the week and reasserted its position yesterday with a sharp drop from the Euro and an increase in the continually higher Dollar Index. The Pound is also struggling to find support as has now become commonplace. Meanwhile, the day has started out much better on Wall Street though markets are still looking at some heavy weekly losses despite opening the day very strongly.
Euro Recovers Slightly But Remains Low
The Euro was languishing at the end of Thursday's trading session. The common currency was as low as it had been since the early part of 2017. The sharp move lower with forex brokers seems to have been prompted by comments from Federal Reserve Chief Jerome Powell. Even though data from the US showed that inflation eased slightly in April, Powell's comments were viewed as more hawkish and had an impact on the currency market.
The Fed Chair voiced his expectation that rate hikes of 50 basis points would very likely happen at the next FOMC policy meetings. This was already widely expected by most in the market, but it was the comment that he was prepared to go further if the data were to move in the wrong direction which created a move further toward the USD.
Sterling Facing Another Lower End to Week
The Euro was not the only currency to falter on foot of the comments from Powell. Sterling also dropped back to under 1.22. The more negative than expected comments are not the sole cause of the struggle for the Pound though they certainly did not help. The currency is struggling to find any traction among buyers, particularly after disappointing data from the UK earlier in the week.
Brexit has also continued to hamper the Pound as the issues continue with the British exit from the EU. There is still a major stumbling block between the UK and EU in regard to Northern Ireland with the UK continuing to threaten alteration of the Brexit agreement unless the EU shows flexibility on the issue.
Strong Opening on Wall Street
Wall Street has surged in the early part of the trading day. This kind of upward movement has not been seen lately on the street and when it has, it has quickly been followed by moves lower in what has been a very choppy period.
The Dow Jones jumped close to 500 points at the open as it tries to break a run of six consecutive losing days. There were similar gains with the other major indices too. The S&P 500 was up more than 2% while the beaten up Nasdaq led the way with a more than 3% gain. Traders will be eager to see if these gains can lead to a more sustainable change in momentum.