EUR/USD hits 9-day low on forecasts of hung parliament in the UK

The EUR / USD is being dragged lower by the sell-off in Pound as investors fear a hung parliament in the UK will be bad for both parties involved in the Brexit process. The currency pair hit a 9-day low of 1.1180 after having clocked a high of 1.1237 earlier today.

Labour’s Corbyn is now looking likely to be the new UK Prime Minister. Labour is in favor of a softer Brexit, which is positive for both EUR and GBP in the long run. However, in the short-run, both currencies could drop to fresh multi-week lows in a knee-jerk reaction to Corbyn victory/hung parliament. 

The ECB did drop the reference to lower rates in forward guidance, but that did not help EUR gain ground, mainly because the central bank took note of weak inflation and reiterated the readiness to do more if required. Moreover, the decision to drop the reference to lower rates does not necessarily mean the rates could go higher.

EUR/USD Technical Levels

The key support levels are 1.1162 (May 29 low), 1.1109 (May 30 low), 1.1075 (May 18 low). The key resistance levels are 1.1194 (previous day’s low), 1.1236 (5-DMA), 1.1284 (June 6 low).