EUR/USD Forecast To Continue Falling
The last week saw the EUR/USD pair hit its lowest levels since September 2013. It fell through the 1.33 level to 1.3285 and is expected to continue heading towards the 1.30 level.There were signs that the pair had found support around 1.3240 on Thursday thanks to the continuing USD strength. However, Quek Ser Leang, a UOB Group Market Strategist, said, “The break of the strong support at 1.3290/95 resulted in a sharp drop to an overnight low of 1.3255. Despite oversold conditions, there are no signs of stabilization just yet and the current weakness is expected to extend towards 1.3240. Only a move back above 1.3295 would indicate that a temporary low is in place.”
The downwards trend is expected to continue as data showed that Euro zone private sector activity has continued to slow this month.
This slowing down is adding to fears that the region’s recovery may be faltering. Activity in the manufacturing sector has slowed to a 13 month low and the Euro zone manufacturing PMI is down to 50.8 from 51.8 in July.
At the same time demand for the dollar has been reinforced after the minutes of the Federal Reserve’s July meeting showed that strengthening recovery and continued improvement in the labour market may cause a move towards tightening monetary policy.