Markets
14:47, 26-Apr-2019
Investors brace for more euro pain as U.S. economy, dollar flex muscles
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After the euro's slide to 22-month lows against the dollar, investors are scrambling to shield themselves from more weakness as Europe's poor data contrasts with an upbeat U.S. economy that is sending the dollar surging.
Options markets suggest investors this week bought sizeable downside protection against further euro weakness against the dollar, after the single currency broke below its 2019 low of 1.1177 U.S. dollars, a level that has opened the door to more selling.
On Thursday, the pair traded as low as 1.1117 U.S. dollars, the lowest since May 2017. The dollar, meanwhile, soared against a basket of currencies as robust data on jobs and durable goods orders took its year-to-date gains to 2.2 percent.
"We have been increasingly doubtful that the euro can hold," said Neil Mellor, currencies analyst at BNY Mellon. "Growth forecasts have been slumping, and the ECB (European Central Bank) might have to revise its expectations again."
This week's fall — more than one percent so far — follows a period of calm during which euro/dollar, the world's most traded currency pair, has been stuck in its narrowest ever trading range. The tiny price fluctuations have frustrated investors keen on volatility and clear direction.
Source(s): Reuters