Euro: Breaks below key averages against US Dollar – Societe Generale

Societe Generale analysts report EUR/USD has fallen to its lowest level since early April as wider UST/Bund spreads and higher energy prices weigh on the Euro (EUR). The pair has broken below its 50- and 200-day moving averages, with support cited at 1.1560 and resistance at 1.1720. Aggressive European Central Bank (ECB) June hike pricing implies downside risks for EUR versus G10 peers.

Break of key averages signals vulnerability

"Euro in trouble as 50/200dma give way on Fed repricing, higher UST yields and oil/ gas."

"The single currency is struggling as May reaches the half-way point, managing to stay just ahead of the SEK and GBP. EUR/USD slipped to the lowest level since early April, driven by wider UST/Bund spreads and higher energy prices."

"ECB member Lane sowed doubts over the likelihood of a rate increase next month, offering a more balanced assessment of growth vs inflation."

"The aggressive pricing for the June meeting implies downside risk for EUR/G10 if the ECB holds fire next month, all else being equal (oil prices, risk assets, Fed). "

"Support 1.1560, resistance 1.1720."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)