After more than a week of consolidation just shy of key resistance at 1.3800, the EURUSD has broken to the downside despite a flurry of positive data coming from the Eurozone on Thursday morning. The decline comes as traders and investors respond to the mounting trouble in Ukraine, and the potential for military intervention from Russia.
Whether the risk aversion is enough to reverse the longer-term bullish momentum in the pair remains to be seen. Heading into some key U.S. data releases scheduled for Thursday and Friday, the pair currently sits just above the 50-day moving average. Bullish durable goods and GDP data from the U.S. could fuel the downside bias, strengthening the Dollar against its European counterpart, and a close below the 50-day MA would suggest a medium term correction towards 1.3530.
Elsewhere, the Australian Dollar (AUD) logged two-week lows versus the USD after a worse than expected private capital expenditure release early Thursday morning. At -5.2%, the figure fell someway short of a forecast -1.3%. The AUDUSD broke 0.8950 during the Asian session, and a daily close below this level would exert further downside pressure on the Aussie.
Finally, despite a disappointing Swiss GDP figure the Franc has held up against the U.S Dollar, with the USDCHF currently down for the day on what looks to be decidedly indecisive action around previous support at 0.8900. Positive Thursday afternoon U.S. data would likely lead to Franc capitulation and some upside in the USDCHF, initially towards the previous swing low at 0.8950 and, beyond that, the psychologically significant 0.9000 flat.
As a final note, don’t be surprised if the aforementioned risk aversion overrides the bias suggested by data releases heading into the weekend. As global political tension runs high, investors will likely reduce their exposure to their more risky assets before the markets close on Friday.
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