Sive Morten
Special Consultant to the FPA
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Fundamentals
(Reuters) The dollar rose to its highest level since April 2003 against a basket of currencies on Friday, marking its biggest two-week increase since March 2015 as traders piled bets on a massive dose of fiscal stimulus under a Trump U.S. presidency.
Also stoking the dollar rally were growing expectations the Federal Reserve would raise interest rates next month on signs of rising inflation and improved economic growth.
The greenback has climbed 7.3 percent against the yen in two weeks, its steepest such gain since January 1988 and its second-strongest performance in the era of floating exchange rates.
The dollar has been on a tear following Republican Donald Trump's Nov. 8 victory over Democratic rival Hillary Clinton, tracking surging U.S. Treasury yields amid concerns government borrowing to fund possible stimulus programs could stoke inflation.
Traders have seized on the tax cuts, deregulation and infrastructure spending that Trump campaigned on as negatives for bonds and positives for the dollar.
"It has caused a wave of dollar buying across the board," said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.
To be sure, it remained unclear how many, if any, of the policy proposals would materialize. Trump's stance on immigration and trade, if they become law, could hurt the dollar, analysts said.
"The dollar is the wild card," said Richard Bernstein, chief executive officer of Richard Bernstein Advisors LLC said at the Reuters Global Investment Outlook Summit in New York.
The dollar index, hit 101.48, its highest since early April 2003 before paring gains to 101.25, up 0.4 percent on the day.
The gauge of the greenback against a basket of six major currencies was on track for a 4.2 percent two-week gain, its biggest since March 2015.
While Fed Chair Janet Yellen did not explicitly say the U.S. central bank would hike rates at its Dec. 13-14 policy meeting, she told a congressional panel on Thursday that a rate increase was likely "relatively soon."
Political and economic worries abroad provided further lift for the dollar.
The euro, which is vulnerable to a slew of political risks including an Italian constitutional referendum next month and French and German elections next year, hit an 11-month low of $1.0567. It was last down 0.3 percent at $1.0595.
The greenback hit a 5-1/2 month high against the yen of 110.92 before retreating to 110.64 yen, up 0.6 percent from Thursday.
China's yuan fell to an eight-year low at 6.9850 yuan per dollar.
So, it has become a good habit to post articles from Fathom Consulting here. Today is a new one, that is dedicated to ECB policy:
ECB to delay and pray
by Fathom Consulting
- The recent sequence of anti-establishment votes has brought upcoming political events in the euro area into sharper relief.
- This is because the economic frustrations that fuelled both Brexit and President Trump are prevalent across the Western world.
- Although not our central scenario, there is a danger that isolationist politicians, benefitting from a disenchanted electorate, win the day. Nowhere would this be more damaging than in the common currency area.
- With this in mind, and with both economic growth and consumer price inflation still tepid, we expect the ECB to delay and pray when it meets next month.
On 3 December 2015 Mario Draghi announced an extension of the ECB’s Quantitative Easing (QE) programme from September 2016 to March 2017, or until “the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim.” Almost exactly one year later, on 8 December 2016, we expect Mr Draghi to reveal yet another extension of the programme – QE III.
At last month’s ECB press conference, Mr Draghi admitted that an abrupt end to bond purchases is unlikely and that the decisions taken in December “will define the monetary policy environment for the coming weeks and coming months.” Taken together, these two comments all but reveal further action.
As part of its December meeting, the ECB will also publish an updated set of forecasts, which will for the first time include estimates for 2019. According to last quarter’s projections, the ECB expects headline inflation to average 1.2% next year and 1.6% in 2018. If the ECB sees inflation quickening further still in 2019, its projected path of inflation is likely to be consistent with its target of close to, but below, 2%. While we regard the ECB’s inflation projections as far too optimistic set out two alternative visions of a Donald Trump presidency.
In ‘Trump Lite’, Mr Trump is either unwilling or unable to enact much of what he has promised, and the US economy actually fares a little better than if Hillary Clinton had won. In the short term, this is because fiscal policy is looser. Further out, it is because Mr Trump’s fiscal splurge stimulates both growth and inflation, provoking a more rapid normalisation of monetary policy. Markets appear to have concluded the same, with the probability assigned to a US rate hike now higher than it was in the week’s prior to the US election.
As the US is the euro area’s second largest trading partner, it is hoped that Mr Trump’s pledge to unleash fiscal stimulus will benefit the region and boost inflation. Reflecting this, market implied inflation expectations for the euro area, as measured by the 5y5y forward swap, have risen since Mr Trump’s election victory.
…whereas ‘Donald Dark’ might pose an existential threat to the euro area
In our risk scenario, ‘Donald Dark’, Mr Trump delivers something close to what he has crisis, and posing an existential threat to the single currency. There is only so long that the pain can be internalised.
Uncertainty and weak core inflation will force the ECB’s hands
Mr Trump won the US election on his message of change and there is still a complete lack of clarity over which of his proposals he intends to pursue. As a consequence, it may be months until we know what world we are in, ‘Trump lite’ or ‘Donald Dark’. Meanwhile, Italy's referendum and the French national election will give isolationist forces an opportunity to assert themselves within the euro area.
It is due to this exceptional level of uncertainty that we maintain our view that the ECB will announce an extension of its QE programme from March 2017 to September 2017, while keeping the amount of monthly purchases unchanged at €80 billion. This is likely to be accompanied by technical changes to address the increasing scarcity of eligible German bunds – an issue that we will explore in a separate Newsletter in due course.
Although such a change is unlikely to have a material impact on the real economy, an (our ‘hedgehog’ chart reveals why), assuming that the ECB takes its own forecasts at face value, such a projected path of inflation could warrant a gradual winding down of asset purchases.
‘Trump Lite’ mildly positive for euro area inflation…
Since the ECB produced its quarterly forecasts in September, Donald Trump has unexpectedly defeated his democratic rival, Hillary Clinton, and won the US presidential race. In our Global Economic and Markets Outlook for 2016 Q4 we promised, hastening the forces of anti-globalisation and triggering a sharp drop in global trade. In this world, Mr Trump’s victory is merely part of a broader shift towards isolationism, with the UK’s decision to leave the European Union also a reflection of growing discontent with the status quo. Nowhere is cross-border cooperation more essential than in the euro area, whose very survival depends on greater integration. But the economic frustrations that have resulted in both Mr Trump’s victory and the UK’s unexpected decision to leave the European Union are rife within the common currency area.
Next month, less than a week before the ECB’s policy meeting, Italy will hold a constitutional referendum. Its aim is to streamline the bureaucratic process, but with Prime Minister Renzi putting his neck on the line it risks becoming a protest vote for the disgruntled electorate. In recent polls, the “reject” vote was slightly ahead, threatening political upheaval.
Next year, the euro area’s two largest economies, Germany and France, will hold national elections. In both countries, the anti-establishment parties – the AfD in Germany and Front National in France – have enjoyed growing public support. Reflecting the momentum behind the Front National’s Eurosceptic, isolationist, anti-immigration message, Marine Le Pen’s odds of becoming France’s next President have doubled to around 30%. This is better odds than either Brexit or Mr Trump had at this point in their respective campaigns.
Interestingly, the spreads of French and Italian ten-year sovereign bond yields over German bunds have also risen since Mr Trump’s election victory. In our risk scenario, we see sovereign spreads over Germany spike sharply higher, triggering another leg down in the banking abrupt end to QE, or even a tapering, could trigger substantial market volatility – something that the ECB will be keen to avoid at uncertain times like these. Vitor Constancio, vice-president of the ECB, struck a similar tone in a recent speech in which he cautioned against “drawing hasty, positive conclusions” from the market reaction to Mr Trump’s election victory, and said that there is “an abnormal degree of uncertainty” at present.
With growth tepid, underlying inflation persistently weak, and heightened political uncertainty, it is increasingly likely — in our view — that the ECB will delay and pray when it meets next month. Both Mr Draghi and Mr Constancio recently admitted that weak core inflation, up a meagre 0.8% in the twelve months to October, remains a cause for concern. We remain deeply pessimistic about the region as a whole, particularly in our risk scenario.
COT Report
Recent CFTC data shows shy contraction of speculative net short position simultaneously with dropping in open interest. It means that some shorts have been closed. As downward action slow down a bit, currently this moment doesn't bring any worrying. This might be just technical pause in major tendency. Besides, overall contraction of open interest and short postion was not significant.
Technical
Monthly
So right now we know that fundamental background mostly looks bearish for EUR. Now big changes that we see on lower time frames becomes visible on monthly chart as well.
Currently EUR stands at rather strong wide support area. This is lower border of downward channel and all-time 5/8 Fib support. Here EUR has formed Butterfly "buy" and it has reached first 1.27 extension here. Probably it needs some time to pass through this level and supportive fundamental background of US strength that finally are coming probably.
EUR is forming typical reversal candle in May. Price has moved above April top and closed below April's lows. It could not get extended continuation, but usually market shows downward continuation within next 1-3 candles.
Sometimes reversal candles lead to collapse, as it was on EUR around 1.40 area. Thrust down has started particularly by reversal candle in March 2014.
Speaking on big scale bearish signs, we have these ones:
EUR was not able to reach YPR1 and returned right back down to YPP. Following this logic next destination could be YPS1 right around parity and 1.618 butterfly target. This is just another destination point that we have here.
Appearing of reversal candle brings nothing good to bulls. Currently we can't precisely forecast the consequences of its appearing, but even minor results will bring some months of downward action inside current 1.04 -1.15 consolidation... Although potential bearish impact could be even stronger.
Finally we have another bearish sign that looks like bearish dynamic pressure. Take a look that although trend holds bullish - market shows inablitity to move up, even from strong support area. Next strong support stands precisely at parity and will become a culmination of downward action, since this level includes support line, YPS1 and butterfly 1.618 target. Brexit results hardly will bring prosperity to EU and probably will become another bearish driving factor for EUR. We aleardy see consequences of Brexit on GBP, so, some negative impact on EUR also will happen, this is just a question of time.
Also take a look at different behavior near low border of channel. Previously when market has touched it - it shows immediate upside pullback, it was V-shape reversal. Right now behavior is absolutely different, price just hangs on the border and shows no upside action. Any tight consolidation near trendline could become a sign of coming breakout.
Thus, based on monthly chart we could make two major conclusions. First is - real bullish trend will be re-established only when EUR will erase reversal candle and overcome its top above 1.16. EUR has not broken through 1.04 lows yet, but probably this will happen very soon. Our next target on Monthly chart is parity - 1.618 Butterfly extension, YPS1 and trendline support.
It is especially interesting will be price action in relation to YPS1. Breaking it down will mean that long term bearish trend could continue in 2017.
Weekly
Weekly chart also shows bearish action last week. Downward action has accelerated and EUR almost has reached important 1.04 lows. Here we have two major patterns - AB=CD and Butterfly.
Here we can track market action step by step. First EUR has reached 0.618 extension and shown reasonable bounce that coincided with elections by the way. Now it is turned to extension mode and going to next one - AB=CD @ 1.04.
Most important thing with this target is its standing below previous lows around 1.0530. It means that market should get acceleration down as soon as it will break though it. And this will be bad day for those traders who will make bet on 1.04 lows support and expect upside bounce there. These lows are doomed.
This in turn, could lead EUR right to completion of 1.27 Butterfly around 1.01 and minor AB-CD 1.618 extension. Probably they will be reached simultaneously. Right now these targets stand below oversold and not as interesting as nearest one. We suspect that drop could happen on 8th of December as ECB will announce their perspectives on next week and QE program, as it was described in Fathom consulting research.
Daily
So, we've specified our major targets above. On daily chart we do not have any other as last daily target has been hit on Friday and we've talked about it in our video. Daily time frame right now plays secondary role. The only way how we could use it is to watch for upside bounce, and if we will get lucky, use this potential rally for selling.
At the same time absence of real supports makes perspectives of this bounce phantom, especially because EUR is not at weekly oversold. Still if any upside bounce will happen - here we could watch for DiNapoli B&B "Sell" pattern, thrust itself is not bad and suitable for DiNapoli directional patterns:
Hourly
So, it would be nice if we will get daily B&B "Sell" pattern, but taking in consideration absence of oversold and any strong support below the market - EUR could limit upside potential by testing WPP. This will let it to stay inside current downward channel.
If still upside breakout of channel will happen, next level will be an area around WPR1 and K-resistance on hourly chart and this is the level that we would like to get for B&B "Sell" pattern wil be formed on daily chart.
Conclusion:
We still keep the same long-term view on EUR and it still looks bearish. Our next long-term target stands around parity.
On a way down we will have some intermediate targets as well, and next one stands around 1.04 area.
The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.
(Reuters) The dollar rose to its highest level since April 2003 against a basket of currencies on Friday, marking its biggest two-week increase since March 2015 as traders piled bets on a massive dose of fiscal stimulus under a Trump U.S. presidency.
Also stoking the dollar rally were growing expectations the Federal Reserve would raise interest rates next month on signs of rising inflation and improved economic growth.
The greenback has climbed 7.3 percent against the yen in two weeks, its steepest such gain since January 1988 and its second-strongest performance in the era of floating exchange rates.
The dollar has been on a tear following Republican Donald Trump's Nov. 8 victory over Democratic rival Hillary Clinton, tracking surging U.S. Treasury yields amid concerns government borrowing to fund possible stimulus programs could stoke inflation.
Traders have seized on the tax cuts, deregulation and infrastructure spending that Trump campaigned on as negatives for bonds and positives for the dollar.
"It has caused a wave of dollar buying across the board," said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.
To be sure, it remained unclear how many, if any, of the policy proposals would materialize. Trump's stance on immigration and trade, if they become law, could hurt the dollar, analysts said.
"The dollar is the wild card," said Richard Bernstein, chief executive officer of Richard Bernstein Advisors LLC said at the Reuters Global Investment Outlook Summit in New York.
The dollar index, hit 101.48, its highest since early April 2003 before paring gains to 101.25, up 0.4 percent on the day.
The gauge of the greenback against a basket of six major currencies was on track for a 4.2 percent two-week gain, its biggest since March 2015.
While Fed Chair Janet Yellen did not explicitly say the U.S. central bank would hike rates at its Dec. 13-14 policy meeting, she told a congressional panel on Thursday that a rate increase was likely "relatively soon."
Political and economic worries abroad provided further lift for the dollar.
The euro, which is vulnerable to a slew of political risks including an Italian constitutional referendum next month and French and German elections next year, hit an 11-month low of $1.0567. It was last down 0.3 percent at $1.0595.
The greenback hit a 5-1/2 month high against the yen of 110.92 before retreating to 110.64 yen, up 0.6 percent from Thursday.
China's yuan fell to an eight-year low at 6.9850 yuan per dollar.
So, it has become a good habit to post articles from Fathom Consulting here. Today is a new one, that is dedicated to ECB policy:
ECB to delay and pray
by Fathom Consulting
- The recent sequence of anti-establishment votes has brought upcoming political events in the euro area into sharper relief.
- This is because the economic frustrations that fuelled both Brexit and President Trump are prevalent across the Western world.
- Although not our central scenario, there is a danger that isolationist politicians, benefitting from a disenchanted electorate, win the day. Nowhere would this be more damaging than in the common currency area.
- With this in mind, and with both economic growth and consumer price inflation still tepid, we expect the ECB to delay and pray when it meets next month.
On 3 December 2015 Mario Draghi announced an extension of the ECB’s Quantitative Easing (QE) programme from September 2016 to March 2017, or until “the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim.” Almost exactly one year later, on 8 December 2016, we expect Mr Draghi to reveal yet another extension of the programme – QE III.
At last month’s ECB press conference, Mr Draghi admitted that an abrupt end to bond purchases is unlikely and that the decisions taken in December “will define the monetary policy environment for the coming weeks and coming months.” Taken together, these two comments all but reveal further action.
As part of its December meeting, the ECB will also publish an updated set of forecasts, which will for the first time include estimates for 2019. According to last quarter’s projections, the ECB expects headline inflation to average 1.2% next year and 1.6% in 2018. If the ECB sees inflation quickening further still in 2019, its projected path of inflation is likely to be consistent with its target of close to, but below, 2%. While we regard the ECB’s inflation projections as far too optimistic set out two alternative visions of a Donald Trump presidency.
In ‘Trump Lite’, Mr Trump is either unwilling or unable to enact much of what he has promised, and the US economy actually fares a little better than if Hillary Clinton had won. In the short term, this is because fiscal policy is looser. Further out, it is because Mr Trump’s fiscal splurge stimulates both growth and inflation, provoking a more rapid normalisation of monetary policy. Markets appear to have concluded the same, with the probability assigned to a US rate hike now higher than it was in the week’s prior to the US election.
As the US is the euro area’s second largest trading partner, it is hoped that Mr Trump’s pledge to unleash fiscal stimulus will benefit the region and boost inflation. Reflecting this, market implied inflation expectations for the euro area, as measured by the 5y5y forward swap, have risen since Mr Trump’s election victory.
…whereas ‘Donald Dark’ might pose an existential threat to the euro area
In our risk scenario, ‘Donald Dark’, Mr Trump delivers something close to what he has crisis, and posing an existential threat to the single currency. There is only so long that the pain can be internalised.
Uncertainty and weak core inflation will force the ECB’s hands
Mr Trump won the US election on his message of change and there is still a complete lack of clarity over which of his proposals he intends to pursue. As a consequence, it may be months until we know what world we are in, ‘Trump lite’ or ‘Donald Dark’. Meanwhile, Italy's referendum and the French national election will give isolationist forces an opportunity to assert themselves within the euro area.
It is due to this exceptional level of uncertainty that we maintain our view that the ECB will announce an extension of its QE programme from March 2017 to September 2017, while keeping the amount of monthly purchases unchanged at €80 billion. This is likely to be accompanied by technical changes to address the increasing scarcity of eligible German bunds – an issue that we will explore in a separate Newsletter in due course.
Although such a change is unlikely to have a material impact on the real economy, an (our ‘hedgehog’ chart reveals why), assuming that the ECB takes its own forecasts at face value, such a projected path of inflation could warrant a gradual winding down of asset purchases.
‘Trump Lite’ mildly positive for euro area inflation…
Since the ECB produced its quarterly forecasts in September, Donald Trump has unexpectedly defeated his democratic rival, Hillary Clinton, and won the US presidential race. In our Global Economic and Markets Outlook for 2016 Q4 we promised, hastening the forces of anti-globalisation and triggering a sharp drop in global trade. In this world, Mr Trump’s victory is merely part of a broader shift towards isolationism, with the UK’s decision to leave the European Union also a reflection of growing discontent with the status quo. Nowhere is cross-border cooperation more essential than in the euro area, whose very survival depends on greater integration. But the economic frustrations that have resulted in both Mr Trump’s victory and the UK’s unexpected decision to leave the European Union are rife within the common currency area.
Next month, less than a week before the ECB’s policy meeting, Italy will hold a constitutional referendum. Its aim is to streamline the bureaucratic process, but with Prime Minister Renzi putting his neck on the line it risks becoming a protest vote for the disgruntled electorate. In recent polls, the “reject” vote was slightly ahead, threatening political upheaval.
Next year, the euro area’s two largest economies, Germany and France, will hold national elections. In both countries, the anti-establishment parties – the AfD in Germany and Front National in France – have enjoyed growing public support. Reflecting the momentum behind the Front National’s Eurosceptic, isolationist, anti-immigration message, Marine Le Pen’s odds of becoming France’s next President have doubled to around 30%. This is better odds than either Brexit or Mr Trump had at this point in their respective campaigns.
Interestingly, the spreads of French and Italian ten-year sovereign bond yields over German bunds have also risen since Mr Trump’s election victory. In our risk scenario, we see sovereign spreads over Germany spike sharply higher, triggering another leg down in the banking abrupt end to QE, or even a tapering, could trigger substantial market volatility – something that the ECB will be keen to avoid at uncertain times like these. Vitor Constancio, vice-president of the ECB, struck a similar tone in a recent speech in which he cautioned against “drawing hasty, positive conclusions” from the market reaction to Mr Trump’s election victory, and said that there is “an abnormal degree of uncertainty” at present.
With growth tepid, underlying inflation persistently weak, and heightened political uncertainty, it is increasingly likely — in our view — that the ECB will delay and pray when it meets next month. Both Mr Draghi and Mr Constancio recently admitted that weak core inflation, up a meagre 0.8% in the twelve months to October, remains a cause for concern. We remain deeply pessimistic about the region as a whole, particularly in our risk scenario.
COT Report
Recent CFTC data shows shy contraction of speculative net short position simultaneously with dropping in open interest. It means that some shorts have been closed. As downward action slow down a bit, currently this moment doesn't bring any worrying. This might be just technical pause in major tendency. Besides, overall contraction of open interest and short postion was not significant.
Technical
Monthly
So right now we know that fundamental background mostly looks bearish for EUR. Now big changes that we see on lower time frames becomes visible on monthly chart as well.
Currently EUR stands at rather strong wide support area. This is lower border of downward channel and all-time 5/8 Fib support. Here EUR has formed Butterfly "buy" and it has reached first 1.27 extension here. Probably it needs some time to pass through this level and supportive fundamental background of US strength that finally are coming probably.
EUR is forming typical reversal candle in May. Price has moved above April top and closed below April's lows. It could not get extended continuation, but usually market shows downward continuation within next 1-3 candles.
Sometimes reversal candles lead to collapse, as it was on EUR around 1.40 area. Thrust down has started particularly by reversal candle in March 2014.
Speaking on big scale bearish signs, we have these ones:
EUR was not able to reach YPR1 and returned right back down to YPP. Following this logic next destination could be YPS1 right around parity and 1.618 butterfly target. This is just another destination point that we have here.
Appearing of reversal candle brings nothing good to bulls. Currently we can't precisely forecast the consequences of its appearing, but even minor results will bring some months of downward action inside current 1.04 -1.15 consolidation... Although potential bearish impact could be even stronger.
Finally we have another bearish sign that looks like bearish dynamic pressure. Take a look that although trend holds bullish - market shows inablitity to move up, even from strong support area. Next strong support stands precisely at parity and will become a culmination of downward action, since this level includes support line, YPS1 and butterfly 1.618 target. Brexit results hardly will bring prosperity to EU and probably will become another bearish driving factor for EUR. We aleardy see consequences of Brexit on GBP, so, some negative impact on EUR also will happen, this is just a question of time.
Also take a look at different behavior near low border of channel. Previously when market has touched it - it shows immediate upside pullback, it was V-shape reversal. Right now behavior is absolutely different, price just hangs on the border and shows no upside action. Any tight consolidation near trendline could become a sign of coming breakout.
Thus, based on monthly chart we could make two major conclusions. First is - real bullish trend will be re-established only when EUR will erase reversal candle and overcome its top above 1.16. EUR has not broken through 1.04 lows yet, but probably this will happen very soon. Our next target on Monthly chart is parity - 1.618 Butterfly extension, YPS1 and trendline support.
It is especially interesting will be price action in relation to YPS1. Breaking it down will mean that long term bearish trend could continue in 2017.
Weekly
Weekly chart also shows bearish action last week. Downward action has accelerated and EUR almost has reached important 1.04 lows. Here we have two major patterns - AB=CD and Butterfly.
Here we can track market action step by step. First EUR has reached 0.618 extension and shown reasonable bounce that coincided with elections by the way. Now it is turned to extension mode and going to next one - AB=CD @ 1.04.
Most important thing with this target is its standing below previous lows around 1.0530. It means that market should get acceleration down as soon as it will break though it. And this will be bad day for those traders who will make bet on 1.04 lows support and expect upside bounce there. These lows are doomed.
This in turn, could lead EUR right to completion of 1.27 Butterfly around 1.01 and minor AB-CD 1.618 extension. Probably they will be reached simultaneously. Right now these targets stand below oversold and not as interesting as nearest one. We suspect that drop could happen on 8th of December as ECB will announce their perspectives on next week and QE program, as it was described in Fathom consulting research.
Daily
So, we've specified our major targets above. On daily chart we do not have any other as last daily target has been hit on Friday and we've talked about it in our video. Daily time frame right now plays secondary role. The only way how we could use it is to watch for upside bounce, and if we will get lucky, use this potential rally for selling.
At the same time absence of real supports makes perspectives of this bounce phantom, especially because EUR is not at weekly oversold. Still if any upside bounce will happen - here we could watch for DiNapoli B&B "Sell" pattern, thrust itself is not bad and suitable for DiNapoli directional patterns:
Hourly
So, it would be nice if we will get daily B&B "Sell" pattern, but taking in consideration absence of oversold and any strong support below the market - EUR could limit upside potential by testing WPP. This will let it to stay inside current downward channel.
If still upside breakout of channel will happen, next level will be an area around WPR1 and K-resistance on hourly chart and this is the level that we would like to get for B&B "Sell" pattern wil be formed on daily chart.
Conclusion:
We still keep the same long-term view on EUR and it still looks bearish. Our next long-term target stands around parity.
On a way down we will have some intermediate targets as well, and next one stands around 1.04 area.
The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.
