An Australian GDP report tonight showed the Australian economy unexpectedly contracted for the first time in 8 years, encouraging traders to continue and favor the safe haven dollar.
The market responded with a temporary burst of high demand for the American currency – sending EURUSD to a 3 moth low at 1.2456.
Although EURUSD has maintained a bearish sentiment for the last month, the pair was reluctant to drop much under 1.2500 since the beginning of the year.
Technically, the pair looks like it is ready to correct back to higher levels. However, this technical probability has to be followed by the support of a fundamental ground, before it can come into play.
Any factor that can return some of the lost confidence in financial markets can serve as a trigger for such a correction.
In the meanwhile, the market’s main focus will be on tomorrow’s rate decision, expected from both the ECB and the Bank of England.
Any surprises there can certainly send major pairs to a new trading rang by the end of the week.
Z.Georgi
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