EUR/USD dives to fresh five-month lows near 1.0600 on dovish ECB
Source Fxstreet
- The Euro dives on a combination of a dovish ECB and a hawkish Fed
- The pair is on track to its weakest weekly performance in more than one year.
- Upside attempts are expected to be limited below 1.0725 and 1.0755.
The Euro has been falling like a stone over the last two days, crushed by the combination of a hawkish Federal Reserve and a dovish European Central Bank. The pair has lost nearly 2% in the last three days and is set to close its worst weekly performance in more than one year.
The ECB left rates unchanged at the 4% level in a contested decision, as some committee members were in favour of a rate cut. This, and the dovish tilt on the monetary statement has boosted expectations that the bank will start easing its monetary policy soon. Investors have marked June in their calendars.
This would put the ECB on the unprecedented position of shifting its monetary policy ahead of the Federal Reserve. The Fed is in a polar opposite, as the shock of the US inflation and the strong macroeconomic data is forcing the bank to dial down its monetary easing plans.
In this scenario, it is difficult to see any support for the Euro. The pair might see some correction from strongly oversold levels on intra-day charts, although upside attempts are expected to be limited. Supports are 1.0630 and 1.0525. Resistances lie at 1.0725 and 1.0755.
Disclaimer: For information purposes only. Past performance is not indicative of future results.
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