$EURUSD Increase in Buying Contracts -
in a bind. It has so far resisted the kind of tight policy tightening central banks around the world are implementing, suggesting they will raise borrowing costs by a quarter point later this month. This is likely to keep the interest rate differential wide, which will keep pressure on the single currency.
The supply of safe-haven assets such as the dollar is unlikely to recede amid a gloomy outlook for global growth. The picture in Europe is particularly bleak, given fears that stopping gas flows from Russia could trigger an economic crisis in the region and limit the European Central Bank's ability to raise interest rates, a headwind for the currency.
The Euro is even struggling to break against the British Pound. And that's as the UK grapples with political uncertainty, the fallout from Brexit and hyperinflation - a outlook so dire that it has prompted Bank of America analysts to warn of an existential crisis for the pound. The euro posted its worst weekly performance against the pound since March last week, and has since fallen to around 84.20 pence.
Dominic Banning, FX analyst at HSBC, expects the pair to trade back towards 84/83 pence, with a lot of negative news now pricing in the Pound. He said that while he is not recommending a direct buy of the pound - especially against the dollar - it may start to make progress against the euro. Not everyone agrees. Whereas Matthew Savary, analyst at BCA Research Inc. He sees the Euro going back to 90p due to strong headwinds facing the British Pound.
All technical indicators have reached oversold levels, and international banks have often hinted at the existence of strong purchase contracts for the euro-dollar from the parity level, which explains the current cautious stability. The EUR/USD's upcoming gains will remain vulnerable to a rapid collapse.
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