The euro slid for a fourth consecutive day against the greenback to around the 1.113 area, as market participants started to price in the likelihood of a June rate hike by the US Federal Reserve, following better-than-expected US Q1 GDP.
The sustainability of the dollar’s rally will be tested on Friday, with the non-farm payroll number in focus. A strong jobs report would probably firm up the Fed’s decision to trigger a second rate hike this year, and also reinforce investor confidence in the US economy.
Separately, in the wake of the Manchester bomb attack, euro and sterling were both hammered due to security concerns and rising doubts around European countries’ efforts in anti-terrorism.
With just nine days left before the UK snap election and then Brexit talks, the Manchester bomb attack has raised further questions over how the British Government would pool security intelligence with EU allies post-Brexit. Recent polls showed the Conservatives are now holding a narrower lead of only 9 percentage points.
Technically, EUR/USD has broken down the immediate support level of 1.1170; its next support level could be found at the 1.098 area (100% Fibonacci level).
GBP/USD has also broken down its key support level of 1.286 to around the 1.280 area (see chart). Its "SuperTrend (10,2)" has flipped from green to red, indicating the trend has turned bearish. The immediate support level could be found at the 1.267 area.
Heightened market volatility is likely over the election period, which could result in widened spreads. We recommend that you monitor positions carefully, consider the use of appropriate risk management tools and maintain a sufficient account surplus throughout this period.
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.