Forex: EUR/USD pushes back above 1.24

[Ramon Ramirez]

The European single currency is set to close the week down around 0.9% against the greenback, as EUR/USD hovers above the 1.2400 figure ahead of the closing bell this Friday in North America, poised to record its fifth consecutive week of losses.

EUR/USD managed to touch a new 23-month low as it trades a broad daily range between 1.2286 and 1.2454; at the time of writing, the pair is moving to the top of the range, last at 1.2435 vs. 1.2364 late Thursday.

Overall though, the USD remains strong as the global growth outlook deteriorates and uncertainty in Europe takes its toll on risk sentiment. As Volatility and uncertainty continues to rise, safe haven yields like German bonds have fallen to record levels.

“Until there is some relief to the uncertainty that surrounds Europe, financial markets are likely to continue removing exposure to Europe,” says Camilla Sutton, CFA, CMT, Chief Currency Strategist at Scotiabank. From a technically perspective, the outlook is bearish as an RSI of 18 pushes EUR/USD well into oversold territory, says Ms. Sutton; “but major signals [remain] in sell territory and [the] downward trend [is] strong. Ignore RSI.”

In the week ahead, more light may be shed on the possibility of the Fed to take more action in the way of QE3 after a disappointing May nonfarm payrolls report earlier today, which showed that the US economy only added 69k jobs on month and rose the unemployment rate to 8.2%.