Euro-Dollar Due for Rebound from Two-Month Lows Amid Selloff
The Euro-Dollar exchange rate has reached its lowest level in two months after a bruising week. However, experts at CIBC Capital Markets believe that the selloff looks stretched and a correction is due, with a potential short-term Dollar reversal.
Oil prices eased on Friday as US and Iranian negotiators explored a seven-day deal to reopen the Strait of Hormuz, cooling the global bond selloff and slowing the Dollar's rally. The Euro rose against the Dollar, reaching 1.1389 at the time of writing, just above Thursday's low of 1.1366.
The daily chart shows that the spot rate has moved further from its 21-day moving average than is typical. A move back towards the falling average, currently at 1.1538, looks likely, with solid graphical support at 1.1360 adding to that conviction. This level was where the July selloff found a floor.
CIBC expects EUR/USD to move towards 1.15 in the short term and notes that Brent crude is trading near $110, which prompted the US and China to try to talk down oil prices in mid-September. The Canadian lender also sees downside risks to next week's US payrolls report.