EURUSD prices had a severe fall yesterday, valued at $1.0235, marking its lowest in over twenty years. It is important to recall that the last time the price of EURUSD touched this level was in December 2002, during the economic crisis. However, a similar record was experienced yesterday when the bears dominated and pushed the price so low to this point. Investors were forced to sell off over the increasing fears of an imminent recession caused by a weakening economy.
Another significant factor that ignited the crash in EURUSD yesterday was the breakout in the dollar index. The dollar index dismantled its historical barrier at 105.6 to a new high in twenty years at 106.77. This led to a massive crash in all currencies matched with the US dollar, especially EURUSD and commodities such as gold, silver, and crude oil. After a series of interest rate hikes in March, the US dollar is nearing its apex in June with an aggressive 75 basis point hike. In addition, considering another interest rate hike for the US dollar in July has imbalanced the Euro and other FX currencies. According to experts, it was unwise of the ECB to hike its interest rate by 50 basis points in July. The counterpart dollar has been consistent in its interest rate hike so far, with the current rate of 75 basis points marking the most significant increase since 1994.
Andrew Brenner at National Alliance Securities has blamed the ECB for this decision and considered them weak. In his words, "They missed a good opportunity if they had moved faster at one point; some were thinking 50 basis point rise in July and 75 basis point in September."
EURUSD is currently very weak and unable to recover from yesterday's massive fall. The price is presently ranging at $1.0244 during the Asian session today. The relative strength index (RSI) is currently signalling oversold, which means we might anticipate some recovery from this point. The immediate resistance for EURUSD is seen at $1.0265. Failure to break above this resistance today might give way to further downside.
Significant Factors to influence EURUSD today
EU Economic Forecasts: The European Commission will be giving its macroeconomic forecast for the EU and its member countries today. This will determine the direction of the European economy for the next 2-3 years. Investors often use this forecast to evaluate European countries' possible future economic growth. A hawkish stance from the Committee towards the interest rate will help revive the falling EURO.
Jolts Job Openings (US Zone): The data for the US JOLTS job openings will be released today. The significance of this data is that it measures the number of newly created jobs that are yet to be filled by unemployed people. A higher reading from this data will further strengthen the US dollar leading to more decline in EURUSD. While a lower reading will support the recovery of EURUSD. The forecast for this data is 11.05M, while the previous record was 11.40M.
FOMC Meeting Minutes: The Federal Open Market Committee (FOMC) minutes held last month will be released today. The minutes are expected to provide deep insights into the economic and financial state of the economy and the factors that influenced the Committee members to vote for a 75 basis point interest rate hike. Often investors used this data to predict the direction of the Fed during the next session.