EURUSD broke below the 1.3496 support area on Thursday to dip to as low as 1.3384 as recession alarm bells rang across the globe, spooking investors and fueling demand for the safe-haven USD.
The latest monthly manufacturing readings in the eurozone, the U.K. and China were all weaker than they had been expected, and global equity markets are now in the red, stimulating risk-averse trading conditions in the global Forex market. At the time of writing, the euro is hovering in the 1.3535 price zone, up from 1.3459 as early G20 statements signal joint cooperation on the EZ debt crisis. However, market participants expect the greenback to play the role of a safe-haven currency until the EZ crisis is resolved.
From a technical perspective, “Further decline would likely be seen in next several days, and next target would be at 1.3200 area,” says Franco Shao, Chief Analyst at ForexCycle.com. “Resistance is at 1.3600, only break above this level could indicate that a cycle bottom has been formed at 1.3386 on 4-hour chart, and lengthier consolidation of downtrend from 1.4548 is underway, then further rally could be seen to 1.3800 zone.”
