The EUR/USD dropped to its lowest value in three months on Friday, May 23 as those who trade forex responded to a lackluster report about German business confidence.
The common currency reached $1.3614, according to Reuters. Later in the session, the euro recovered relative to the dollar, reaching $1.3630. Investors who harness technical analysis might want to know that the EUR/USD declined below its 200-day moving average of $1.3636.
These price movements happened after the Ifo institute’s German business climate index moved below 110.4 in May from 111.2 a month earlier, Bloomberg News reported. The results fell below the 110.9 predicted by economists taking part in a poll conducted by the media outlet. The meager data helped fuel expectations that the European Central Bank could potentially heighten its current stimulus policies as early as June.
The euro has been having a tough time lately, as it was on track to record its third straight weekly loss against the dollar, according to the news source. Vassili Serebriakov, a New York-based foreign-exchange strategist at BNP Paribas SA, spoke to these headwinds.
“We’ve seen more persistent selling pressure on the euro,” Serebriakov told the media outlet. “The Ifo plays into that.”
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Eric Viloria, currency strategist at Wells Fargo Securities in New York, noted similar concerns, telling Bloomberg that the weakness in the Ifo index will help create headwinds for the euro that could push the common currency lower.
Individuals who trade forex might benefit from knowing about the recent drop in the value of the EUR/USD, as well as the economic data that helped fuel this decline.
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Article provided by HY Markets Forex Blog