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Market Analysis

Home » Technical Analysis » Daily » EURUSD – Brexit Is All What Matters, Euro Nosedives

EURUSD – Brexit Is All What Matters, Euro Nosedives

Posted by FXTimes in Daily - June 24th, 2016 11:03 am GMT

Euro EURCAD

Key Points

  • Euro crashed against the US Dollar, as the UK voted to leave the EU.
  • The outcome of Brexit was shocking, and the financial markets were seen trading with a lot of volumes after the outcome.
  • The German business sentiment index released by the CESifo Group posted a rise from 107.7 to 108.7 in June 2016.
  • The German IFO Current Assessment also posted a rise and came in at 114.5 in June 2016.

Technical Analysis 

As mentioned, the Euro collapsed versus the US Dollar, and traded down by around 400 pips. The EURUSD pair even broke a major support trend line on the daily chart to trade as low as 1.0914 during the EU session.

EURUSD

The pair traded almost close to the 1.618 extension of the last wave from the 1.1106 low to 1.1430 high, which acted as a support area.

A daily close below the trend line support may call for more losses in EURUSD in the short term.

German Business Sentiment Index

In the Euro zone today, the German business sentiment index was released by the CESifo Group. It is closely watched as an early indicator of current conditions and business expectations in Germany, and was expected to post a decline in June 2016. However, the outcome was positive, as there was a rise from 107.7 to 108.7 in June 2016.

The report stated that “Sentiment in the German economy improved significantly ahead of the Brexit referendum. The Ifo Business Climate Index rose to 108.7 points in June from 107.8 points in May (seasonally adjusted). Satisfaction levels with the current business situation were only slightly higher, but the short-term business outlook improved significantly. The German economy remains buoyant. “.

Overall, the market sentiment is strongly bearish due to Brexit, and may continue to weigh on the Euro in the near term.

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