EUR/USD tumbles to two-month lows, approaches 1.0500
- US Dollar Index rises 1% even as US yields tumble.
- Risk-off sentiment dominates Wall Street opening, Dow Jones drops by more than 500 points.
- EUR/USD suffers worst day in months, tests crucial support area.
The EUR/USD is falling sharply on Wednesday and recently printed a fresh two-month low at 1.0521. It is hovering around 1.0550, after testing a critical level. The US Dollar rocketed as markets tumbled on banking concerns.
USD up on risk aversion, despite yields and data
Economic data from the US came in below expectations, adding to expectations of a softer Federal Reserve. The economic figures are offset by ongoing developments around the banking crisis that crossed the Atlantic on Wednesday.
Fears about the health of Credit Suisse (CS) triggered a sell-off in banking shares across the globe. CS shares are falling 13% in Wall Street; after being down by almost 30%. Its monn shareholder, the Saudi National Bank, ruled out providing more money.
Government bonds are rising considerably, with yields hitting fresh lows. In Wall Street, the Dow Jones tumbles 1.85% and the Nasdaq drops by 1.45%.
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In the currency market, the Japanese Yen is the best performer followed by the US Dollar. The Euro is falling against it main European competitors. EUR/GBP dropped to the its lowest level in two months below 0.8730 while EUR/CHF fell toward 0.8700.
The EUR/USD is losing more than 200 pips, on the worst day in months.
So far, EUR/USD’s slide found support at the critical area between 1.0500 and 1.0525, the confluence of previous lows and the 100-day Simple Moving Average. A consolidation below would open the doors to more weakness for the euro.
Technical levels