Factors Contributing to the EUR's Decline Against the USD
Updated
Dear Esteemed TradingView Members,
Environment
In recent months, the Euro (EUR) has experienced a notable depreciation against the US Dollar (USD), reaching parity for the first time in two decades. This decline can be attributed to a confluence of factors, including:
Economic Disparities: The ongoing economic challenges in Europe, particularly the energy crisis and the escalating war in Ukraine, have dampened investor confidence in the region's economic outlook. This has led to increased demand for the USD as a safe haven asset.
Monetary Policy Divergence: The European Central Bank (ECB) has been cautious in raising interest rates to combat inflation, in contrast to the US Federal Reserve's more aggressive tightening cycle. This divergence in monetary policies has made the USD more attractive to yield-seeking investors.
Technical Breakdown: The EURUSD pair has broken through significant technical support levels, signaling a potential shift in market sentiment. This technical breakdown has accelerated the EUR's downward trajectory.
Political Uncertainties: Ongoing political uncertainties in Europe, such as the upcoming Italian elections and the potential for renewed tensions between Russia and the West, have further weighed on the EUR.
These factors have collectively contributed to the EUR's recent decline against the USD. While the EUR's depreciation may pose challenges for European exporters, it could also benefit European tourism and make European goods more competitive in international markets. The future direction of the EURUSD pair will depend on the evolving economic landscape and monetary policy decisions in both the eurozone and the United States.
Technicals
The bottom chart shows strong bullish candle on DXY today. Furthermore, the EUR price was overbought compared to EMAs see the top chart, where price has been highly above all the visible EMAs, and the RSI printed a bearish cross on the middle pane. EUR could fall to at least an EMA20 retest, which is around the upper blue line. Persisting bearishness could find the next support at the bottom blue line. These blue lines are historic supports, which could stop or reverse bearish progress.
Disclaimer:
This is not investment advice. Conduct your own research. This publication explains only one aspect of my approach, not my comprehensive strategy. The idea focuses on observations around the price action; reading the indicator descriptions is recommended for understanding of the calculations.
Kind regards,
Ely
Environment
In recent months, the Euro (EUR) has experienced a notable depreciation against the US Dollar (USD), reaching parity for the first time in two decades. This decline can be attributed to a confluence of factors, including:
Economic Disparities: The ongoing economic challenges in Europe, particularly the energy crisis and the escalating war in Ukraine, have dampened investor confidence in the region's economic outlook. This has led to increased demand for the USD as a safe haven asset.
Monetary Policy Divergence: The European Central Bank (ECB) has been cautious in raising interest rates to combat inflation, in contrast to the US Federal Reserve's more aggressive tightening cycle. This divergence in monetary policies has made the USD more attractive to yield-seeking investors.
Technical Breakdown: The EURUSD pair has broken through significant technical support levels, signaling a potential shift in market sentiment. This technical breakdown has accelerated the EUR's downward trajectory.
Political Uncertainties: Ongoing political uncertainties in Europe, such as the upcoming Italian elections and the potential for renewed tensions between Russia and the West, have further weighed on the EUR.
These factors have collectively contributed to the EUR's recent decline against the USD. While the EUR's depreciation may pose challenges for European exporters, it could also benefit European tourism and make European goods more competitive in international markets. The future direction of the EURUSD pair will depend on the evolving economic landscape and monetary policy decisions in both the eurozone and the United States.
Technicals
The bottom chart shows strong bullish candle on DXY today. Furthermore, the EUR price was overbought compared to EMAs see the top chart, where price has been highly above all the visible EMAs, and the RSI printed a bearish cross on the middle pane. EUR could fall to at least an EMA20 retest, which is around the upper blue line. Persisting bearishness could find the next support at the bottom blue line. These blue lines are historic supports, which could stop or reverse bearish progress.
Disclaimer:
This is not investment advice. Conduct your own research. This publication explains only one aspect of my approach, not my comprehensive strategy. The idea focuses on observations around the price action; reading the indicator descriptions is recommended for understanding of the calculations.
Kind regards,
Ely
Note
In this short video, I explained how the breakdown of a possible chart pattern might be behind the recent bearish retracement.
Trade closed manually
My decision to exit my short position was driven by the waning momentum of the bearish EUR trend, which was evident in the RSI crossdown's gentle decline. This delicate movement signaled a potential trend reversal, prompting me to secure my profits.Trade closed: target reached
My risk management strategy closed the profitable short early, but EUR hit the initial target, too. I don't know if you kept the position after I took profit, but you won either ways. Congratulations! 🤑
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.