Neil Davies, Head of Trading at PlutusFX, reports on a busy week for the currency markets
EUR/USD is currently standing at 1.3590, down this morning and also down on the week from a high of 1.36995, touched on the first of the month.
This week has seen the pair impacted by unemployment figures. The Tuesday release of Eurozone figures showed that unemployment had dipped slightly in May, but not by enough to dent the unemployment rate. The divergence within Europe remains stubborn. Germany has a 5.1% unemployed rate as compared to Spain’s 25.1%. Perhaps the Spaniards haven’t yet embraced the concept of free movement of labour across the Eurozone. The Euro slide for the week commenced here.
Meanwhile, across the water, the US economy got the Independence Day holiday off to an early start by announcing that 288,000 jobs were added in June, which dropped the unemployment rate down to 6.1%, its lowest since September 2008. After disappointing Q1 growth numbers, this was the catalyst to further the US Dollar strength.
It may therefore be quite possible that the 1.39925 reached on 8th May this year was the peak of the previously good long term run for the Euro, which saw a near 2 year trend from July 2012 where it touched a low of 1.2042.
The crucial level on the downside for the Euro is 1.3477, and any breach below this could see further weaker levels tested. If the economic data from the States continues to be strong, don’t be surprised if this happens.
Neil Davies, Head of Trading, PlutusFX