EUR/USD ebbs lower into 1.1260s, with Friday’s rebound seen as excessive by many
- EUR/USD has spent Monday’s session ebbing lower after losing its grip on the 1.1300 level.
- Some strategists saw Friday’s big move higher as overly excessive.
EUR/USD has spent the majority of Monday’s session gradually ebbing lower, with the pair now trading close to session lows in the 1.1260s, having opened Monday trade above 1.1300. On the day, the pair is now down close to 0.5%. The move lower is in fitting with a broader reversal of last Friday’s big moves seen across asset classes. For FX markets, that means the US dollar has been picking up, with those gains concentrated most heavily against the currencies it lost out to the most on Friday.
Recall that panic over the emergence of the highly transmissible and potentially vaccine-evading Omicron variant roiled global markets at the end of last week, triggering a combination of risk-off and an unwind of hawkish central bank bets. For USD, this meant it got battered against the euro, yen, and Swiss franc as Fed rate hike expectations for 2022 were dialed down, while the movement in rate hike expectations for the ECB, BoJ, and SNB wasn’t much changed. That’s because markets hadn’t been expecting much by way of rate hikes from these central banks anytime soon anyway!
The opposite trend is being observed for the most part on Monday, with the dollar paring back on some of its recent losses against both the euro and yen. Some FX strategists touted last Friday’s moves in FX markets and Fed rate hike expectations as overly exaggerated and some seem to have seen Friday’s dip as a dollar buying opportunity. Indeed, if the global economy is about to be rocked by a newer, nastier Covid-19 variant, then buying USD for its safe-haven purposes likely makes sense. With respect to EUR/USD then, the recent bounce may well prove to be have been a great opportunity to reload short positions.
Reprinted from FXStreet_id,the copyright all reserved by the original author.
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