Selling EUR/USD Below Parity on China News
Skerdian Meta • 2 min read
EUR/USD surged higher on Friday last week, as the US Dollar softened on hopes that China will ease or end their Covid-19-related lockdowns. The restrictions in China have hampered business activity in the world’s second-largest economy and are influencing supply chains.
The Euro rallied more than other major currencies on this speculation, revealing that the market positioning of USD longs is more pronounced against the Euro, rather than against the GBP, JPY and other currencies. Although, hopes of China re-opening in full were dashed during the weekend with health authorities there hosing down the rumours and re-affirming that the current practices will be adhered to.
EUR/USD Daily Chart – The Main Trend is Still Bearish
Can buyers push up to the 100 SMA?
With that in mind, it is not surprising that Monday has brought a reversal in fortunes for EUR/USD as prices opened with a bearish gap lower at the Asian session the open. Although, buyers returned back pretty quickly and pushed the price higher, approaching parity.
We decided to open a sell forex signal, since the situation in China is not that clear, whether they want to reopen fully or not. Meanwhile, we are seeing some signs that the slowdown in the Eurozone economy might be coming to an end, but it is still too early to tell.
Eurozone November Sentix Investor Confidence
- November Sentix investor confidence -30.9 points vs -35.0 expected
- October investor confidence was -38.3 points
This is the first improvement in euro area investor morale in three months, as the forecast for a milder winter is giving hope that the energy crunch faced in the months ahead will not be as bad as feared. The expectations reading also rebounded from -41.0 points in October to -32.3, its highest since June.