EUROPEAN STOCKS CRASH AS EURO SLIPS TO PARITY WITH USD
Global indices declined sharply as investors remained concerned about growth and soaring inflation. In Europe, indices like the DAX and CAC 40 declined by more than 0.70%. Similarly, in Asia, leading indices like the Hang Seng and Nikkei 225 crashed by over 1%. The same trend continued in the US, where futures tied to the Dow Jones and Nasdaq100 declined by over 300 points. Investors are now waiting for many large companies to publish their quarterly earnings. Some of the top companies that will publish their results are Morgan Stanley and United Health.
The euro sell-off continued as worries over the European economy continued. Notably, the currency declined below parity with the US dollar, marking a spectacular downfall for the currency. The decline happened as the Nord Stream pipeline went into maintenance. There are concerns about whether Russia will restart sending gas to Europe. The country has already slashed the amount it sends to countries like Italy and Germany. Further, the European Commission decided to slash the economic outlook for the bloc. Data by ZEW showed that the economic sentiment declined from -28 to -53.8 in July.
The British pound and FTSE 100 declined as investors continued to watch the ongoing competition to replace Boris Johnson. Rishi Sunak, the former Chancellor of the Exchequer, received backing from Dominic Raab and Grant Shapps. At the same time, Liz Truss received backing from Rees Mogg and Nadine Dorris. They argue that she will unite the different sides of the Conservative Party. Still, analysts believe that the new leader will likely have no major implications on the UK economy since they will seek to implement most of Boris Johnson’s policies.
EURUSD
The EURUSD pair declined to the parity level of 1.00. This sell-off marked a spectacular downfall for the euro, a few weeks after it retested parity against the Swiss franc. The pair is trading at 1.0014, which is slightly above the intraday low of 1.00. On the hourly chart, the pair is below the Ichimoku Cloud. The Relative Strength Index (RSI) has moved slightly below the oversold level while the Average Directional Index (ADX) has declined slightly. Therefore, the pair will likely continue falling as sellers get more comfortable below 1.00.
USDCHF
The USDCHF pair continued its strong bullish trend on Tuesday as the dollar strength continued soaring. The pair rose to the highest point since June 16. On the four-hour chart, the pair has moved above the 25-day and 50-day moving averages. At the same time, the Relative Strength Index (RSI) and the DeMarker have moved above the overbought level. Therefore, the pair will likely keep rising in the near term.
GBPUSD
The GBPUSD pair continued its bearish trend as the market focused on the political happenings in Europe. The pair managed to move below the important support at 1.1875, which is slightly above the intraday low of 1.1800. On the hourly chart, the pair is below the 25-day moving average while the Relative Strength Index (RSI) has moved below the oversold level. The pair will likely rise and retest resistance at 1.1875 and then resume the bearish trend.
