The EUR/USD has now entered a pivotal price zone that is approximately 1.0600-1.0450, which was the low point in the previous 1-2 years. Strong demand has fuelled a rebound since Thursday's removal of the 1.0500 option barriers. Between 1.0500 and 1.0450, there are numerous bids and profit-taking activities. The upside potential is anticipated to be restricted by the robust US dollar outlook, with sellers anticipated in the 1.0600-1.0650 range. The uncertainty and fear that can drive FX volatility have been highlighted by the robust demand for fx options implied volatility on setbacks. The consistent demand for USD call options highlights the ongoing EUR/USD downside concerns. At 0.6 USD calls, 1-month EUR/USD risk reversals are trading at post-election highs. Investors should take into account the impending expiries, with a significant number occurring around 1.0600 into today and next week.
Since the U.S. election, the dollar has experienced a significant increase, with the USD index currently at 58% of the EUR, a significant increase of approximately three percent. As of Thursday's apex, the USD/CNH has increased by 2.5%. Since the U.S. election, the Malaysian ringgit and Thai baht have declined by approximately 4%, while the ZAR, which was a top performer prior to the vote, has declined by over 6%. Close trading partners' currencies, such as the Canadian dollar and the Mexican peso, are hitting new lows. It is more difficult for the United States to compete due to the stronger currency, which also results in a tightening of monetary policy.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!