The Turkish lira decline may spread to the euro

The FxPro Analyst Team:

The demand for safe-haven assets has increased after S&P had touched a record high. The problems of the Turkish lira can exacerbate the market concerns.

Stocks S&P 500 futures on Monday updated historic highs but shortly after fell under some pressure. One of the reasons is the disappointment in Alphabet report, whose stocks are losing more than 7% in premarket. But even worse, Chinese data showed a decline in production activity. The technical analysis demonstrates the weakening growth momentum in the markets and increases the chances of a quick corrective pullback. The markets may require an impressive positive factor to continue the rally, which may be a further sharp easing of the Fed position (Wednesday), and a strong labour market report (on Friday).

EURUSD EURUSD has added about 40 pips on Monday to 1.1180. At the beginning of trading in Europe, the pair came close to the level of 1.1200. The former strong level of support now risks becoming important resistance, heightening the pressure on the euro. Among the news, quotes may be affected by estimates of GDP in the eurozone, as well as inflation in Germany.

GBPUSD The British pound rose to 1.2950 dollars, adding about 50 points to Monday’s intraday lows. Behind the growth is the caution of players in front of a tense second half of the week. The combination of the demand for safe assets and reduced trading activity can make MA(200) a relatively strong resistance in the coming days.

USDTRY Turkish lira continues to decline against the dollar. The financial markets of the country are experiencing serious outflows, and the national Central Bank (TCMB) burns foreign exchange reserves to curb the weakening of the national currency. The situation is aggravated by the economic downturn in the country, which limits the ability of the TCMB to raise the rate in order to stabilize the TRY. Potentially, the focus of anxiety can spread to the whole emerging markets sector and to the European markets, including EUR.