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Abstract:The Threat Of A Summer Lull For The Euro And Stocks
The dollar's retreat in the currency market cannot gain traction, making us question whether we will see a breakout of key support levels for the dollar. The hesitations of bears and a seasonal slowdown in trading activity may lead to a new growth impulse that will have to wait many months.
The well-known motto “sell in May and go away” is often falsely interpreted as a warning against sagging markets. History tells us that trading activity, and the determination of players to storm new extremes, start to fall noticeably in May.
Dow Jones performance
As always, there are exceptions to this rule, like what we saw last year when April and May served as a starting base for the relief rally in US stocks. But then again, it is worth looking at the performance of the European markets to see whether it was possible to save yourself a lot of nerves and energy by staying out of the equity markets until November and not lose so much.
Euro Stoxx 50 performance
In the currency market, it is rare to see such a long holiday. EUR/USD usually has the same trend in June and July as the beginning of the year, but right now, it is not easy to clearly define the prevailing direction of this year.
From a monetary policy perspective, and EUR/USD behavior patterns in 2021, we see some analogies with 2013. If so, the pair may continue its uncertain rise in the coming months with regular pullbacks, albeit rewriting local highs.
EUR/USD sticking to the uptrend
According to this pattern in the EUR/USD, it is worth paying attention to the two dynamics at the 50 and 200-day simple moving averages. If the slump under the 50-day moving average is marked by increased selling, then the sell-off in the pair will not stop at the 200-day average either. Thus, the decline of the former line under the latter one, the so-called “death cross,” will question the strategies for the long-term fall of the USD.
The described pattern is only a possible development, and it is worthwhile to look for a EUR/USD movement near the signal lines. And while EUR/USD could stay above the 50-day MA, sticking to the uptrend, we may see further 'buying the deep' pattern, which is in place since April.
(Source: FxPro)
Disclaimer:
The views in this article only represent the author's personal views, and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, and will not be liable for any loss caused by the use of or reliance on the information in the article.
Euro set for biggest monthly drop since mid-2019 on economy fears
Is The Euro Dying?
When it comes to the future of European capital market after Brexit, Britain and the European Union had not seen great disputes as they did over other issues. But the situation is changing now.
The euro has been in a declining trend recently, falling against US dollar for 8 consecutive trading days since January 31st , 2020. Technically, the euro may be slightly oversold, and 1.0880 is a key support level for EUR/USD.