Oversold Euro Due for Correction

The Euro has weakened further today with the EURUSD dropping to lows of 1.4305. The dollar, in fact, benefited from safe haven flows, in general, by rising against most of the other major currencies. For instance, the USDYEN achieved highs of 90.35 before retracting to its present value of 89.75.

However, as the EURUSD is heavily oversold, there are possibilities of a corrective action before the weekend. Weak data releases emulating from the Euro-zone should ensure that the ECB will maintain its dovish outlook into the New Year.

The GBPUSD crashed to new lows of 1.6080 today before rallying to 1.6145. This decline was caused by a much worse than expected Retail Sales figure which indicates that UK consumers are reluctant to spend whilst confronted by an ongoing recovery.