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Forex news: EUR/USD breaks parity on Fed hike fears and Italian political crisis

By Piero Cingari

16:19, 14 July 2022

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In this article:
DXY
US Dollar Index
104.3741 USD
-0.159 -0.150%
EUR/USD
EUR/USD
1.05593 USD
0.00044 +0.040%
USD/JPY
USD/JPY
135.793 USD
-0.9 -0.660%
GBP/USD
GBP/USD
1.22734 USD
0.00336 +0.270%
USD/CAD
USD/CAD
1.36141 USD
0.00216 +0.160%

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Euro dollar rate concept
EUR/USD hit 0.995, breaking down parity levels – Photo: Shutterstock

The euro-dollar exchange rate (EUR/USD) dropped below the parity threshold on Thursday, hitting an intraday low of 0.995, due to growing fears of a one-percentage-point rate hike by the Federal Reserve in July and following Mario Draghi's resignation as Italian prime minister

After yesterday's shocking US inflation data, with the CPI index rising 9.1 percent year-over-year in June, market speculators have readjusted their Fed rate forecasts, market speculators have readjusted their Fed rate forecasts, with the CME FedWatch Tool now pricing in a 50% probability of a 100 basis point hike in July. The last time the Fed raised rates by 100 bps in a single meeting was in 1981, the last time US inflation topped 9%.

Moving to Europe, the single currency continues to receive negative political headlines. Despite gaining a vote of confidence in the Senate despite the boycott of the Five Star Movement, Draghi announced his resignation as Italian prime minister due to the coalition's narrow majority.

According to today's US macro figures, the number of Americans filing new jobless claims jumped by 9 thousand to 244 thousand in the week ending July 9th, the most since November 2021, and slightly above market forecasts of 235 thousand, but not enough to decisively invert the dollar's strength.

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Chart of the day: EUR/USD broke parity as Draghi resigns

a chart showing eur/usdEUR/USD hits 0.995 on Thursday, 14 July – Photo: Capital.com, Source: Tradingview

Forex market today: USD gains against all majors 

A forex table that compares nine major currencies against each other, including USD, EUR, GBY, JPY, CHF, AUD, NZD, CAD and NOKMajor currencies performance today 13 July 2022, 17:30 UTC – Photo: Capital.com

EUR/USD live chart – Euro vs US dollar exchange rate today (EUR to USD)

Japanese yen in a free fall: USD/JPY hits August 1998 highs

USD/JPY chart hitting multi-decade highsUSD/JPY crosses 139 levels, the highest since August 1998

Japanese yen (JPY) trading news: The Japanese yen's depreciation continues unabated, fueled by expectations that the Fed will raise interest rates by one percentage point in July and the Bank of Japan's dovish stance. USD/JPY reached an intraday high of 139.4 before falling down to 139 at the time of writing. It is at its highest since August 1998. As previously said, the prognosis for the USD/JPY pair can only be altered by the development of indisputable indicators of a severe recession in the United States, which might herald a policy shift by the Federal Reserve.

AUD/USD

0.68 Price
+0.250% 1D Chg, %
Long position overnight fee -0.0013%
Short position overnight fee 0.0001%
Overnight fee time 22:00 (UTC)
Spread 0.00006

USD/JPY

135.79 Price
-0.660% 1D Chg, %
Long position overnight fee 0.0016%
Short position overnight fee -0.0041%
Overnight fee time 22:00 (UTC)
Spread 0.010

GBP/JPY

166.66 Price
-0.380% 1D Chg, %
Long position overnight fee 0.0000%
Short position overnight fee -0.0001%
Overnight fee time 22:00 (UTC)
Spread 0.027

EUR/USD

1.06 Price
+0.040% 1D Chg, %
Long position overnight fee -0.0027%
Short position overnight fee 0.0008%
Overnight fee time 22:00 (UTC)
Spread 0.00006

USD/JPY live chart – US dollar vs Japanese yen exchange rate today (USD to JPY)

Pound shows no signs of recovery: GBP/USD flirts with 1.18

A chart showing GBP/USD pairGBP/USD is nearing oversold levels – Photo: Capital.com / Source: Tradingview

British pound (GBP) trading news: The British pound also had a session in the red today, as bets on a possible 100 bps rate hike by the Federal Reserve pushed the cable (GBP/USD) to an intraday low of 1.178, before slightly rebounding to 1.18. As the fight for Downing Street heats up, investors remain focused on the political environment. The first poll for a new Tory leader was held yesterday, and the second round is being held today, with Rishi Sunak leading. The 14-day RSI is once again approaching oversold territory, but has failed to deliver a significant bullish reversal signal in all other occurrences this year.

GBP/USD live chart – Pound vs US dollar exchange rate today (GBP to USD)

Canadian dollar declines despite BoC’s monster hike: USD/CAD hits October 20's highs

a chart showing USD/CAD rateUSD/CAD on an rising trading channel testing October 20's highs

Canadian dollar (CAD) trading news: It is a negative day for the Canadian dollar that falls more than 1% against the dollar, touching an intraday low at 1.32, before returning to 1.31, the lowest level since October 2020, while oil shatters towards 90 dollars a barrel (-3% today) under the growing signs of a recession in the United States. Yesterday, Loonie was the best performer among the G-10 currencies, after the Bank of Canada unexpectedly raised rates by 100 basis points to 2.5%, while the market expected a jump from 75 basis points. The USD/CAD pair continues to remain in the upper bullish channel range effective from May 2021. The 14-day RSI indicator has been travelling above 50 for over a month now.

USD/CAD live chart – US dollar vs Canadian dollar exchange rate today (USD to CAD)

Performance of forex pairs as of 14 July 2022

Related reading

A forex table showing the performance of US dollar and the euro against other currenciesForex market heatmap 14 July 2022, 17:50 UTC – Photo: Capital.com

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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