- Further EURUSD weakness is expected with prior support now turning to strong resistance.
- USDTRY slips back after trading above 7.20 as Turkey readies plans to restore confidence.
EUR-USD RATTLED AT FRESH ONE-YEAR LOW
EUR-USD continues its journey lower as the Turkish Lira weakens further. Late last week reports showing EU bank exposure to Turkey rattled the single-currency and today’s fall – USDTRY hit a fresh all time low around 7.20 – compounded the problem.
The Lira did rebound back below 7.00 after the Turkish Finance Minister Berat Albayrak said that the government had a plan to restore calm and that ‘institutions will take the necessary actions as of Monday morning’.
This warning gave USDTRY a short-term bounce, but markets remain likely to sell the Lira into any strength, unless the Finance Minister’s announcement deters the bears. Last week a report in the Financial Times highlighted European bank’s exposure to the Turkish Lira, prompting a sell-off in the financial space.
EURO STOXX BANK INDEX (MAY 2016 – AUGUST 2018)
The pair trade below all three moving averages but have dipped into RSI oversold territory and may find a short-term reprieve before moving lower.
EURUSD DAILY PRICE CHART (OCTOBER 2017 – AUGUST 13, 2018)