Currency report: Hard to believe?

The EUR/USD scored a new all-time high at $1.5977 after higher-than-expected CPI data from the euro zone. A previous resistance level of $1.59 was conquered and, from a technical point of view, a rise to $1.62 could have been expected.

However, subsequent earnings reports showed that US non-financials were doing fairly well and even banks were showing some signs of hope. As a result, the EUR/USD dropped as low as $1.5730 on Friday and the USD/JPY reached î104.30 shortly after breaching the î102.60 resistance level.

In the days to come, the market will be waiting for the next move from the US Federal Reserve, and the prospect of a 25-basis-point cut could act in favor of the dollar. The levels of support on the EUR/USD are at $1.5650 and $1.5540, although the upward trend is a baseline scenario as long as we are above $1.5340.

The appreciation of the dollar did not help emerging market currencies, including the Polish zůoty. The USD/PLN scored multi-year lows at zů.2.1390, but at the end of the week we saw clear profit-taking, with the pair returning to zů.2.1750 and erasing gains from the first part of the week.

Przemysůaw Kwiecień, X-Trade Brokers Dom Maklerski SA