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EUR/USD looks towards 1.16 again as dollar slips

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EUR/USD rises to a high of 1.1574 on the day


If something happens once, it could be down to coincidence. But twice? Nope, most certainly not. It’s a new day and a new week, and despite markets feeling iffy with equities weighed lower, the dollar is once again failing to find haven bids as it did last week.
As a result, the euro (aussie and kiwi as well) are on the move higher as they push towards session highs currently against the greenback. EUR/USD is now testing minor resistance at around 1.1570 but buyers will be aiming for the 1.1600 handle once again as price fails to test the 100-hour MA (red line).
Support at 1.1535 helped to limit the pair’s losses since Friday and with buyers maintaining the near-term bullish bias, a test of the figure level looks very much on the cards. And this despite the single currency’s plight in the wake of Italy’s budget worries (as well as poor Bavarian election results for CSU) makes it a very worrying sign for the dollar.
Although the greenback is still holding up well in the big picture, the lack of haven flows here is a concerning sign in the longer-term outlook. In the months ahead, the Fed will reach closer to a rate ceiling where interest rates will level off and with the dollar’s positioning already looking stretched, the lack of haven appeal is only going to spell further trouble down the road for the greenback.
Markets will be focused on the near-term factors for now such as Italy and general risk sentiment, but the macro outlook for the dollar is starting to lose its appeal the more I think about it and that’s a theme that will start developing more prominently come next year.

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