Sive Morten
Special Consultant to the FPA
- Messages
- 18,659
Fundamentals
As always markets become quiet before the Christmas and New Year's Day, and we do not have a lot of news and events with this period. Still, financial life doesn't stop totally and there are still few moments that we need to take a look at - just recall recent BoJ adventure. But I'll try to not bother you too much this time
Market overview
The number of Americans filing new claims for unemployment benefits increased less than expected last week, pointing to a still-tight labor market, while the economy rebounded faster than previously estimated in the third quarter. Initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 216,000 for the week ended Dec. 17, leaving the bulk of the prior week's decline intact, Labor Department data showed on Thursday.
Economists believe that companies are likely to cut back on hiring before embarking on layoffs. Employers have been generally reluctant to lay off workers after struggling to find labor during the COVID-19 pandemic. The claims report showed the number of people receiving benefits after an initial week of aid fell 6,000 to 1.672 million in the week ending Dec. 10, retreating from a 10-month high. The so-called continuing claims, a proxy for hiring, had trended higher since early October.
Despite the recent increases, continuing claims are about 150,000 lower than they were during this time in 2019, which some economists said suggested that the labor market was far from loosening up.
Nevertheless, labor market strength is helping to underpin the economy by generating solid wage gains, which are contributing to higher consumer spending.
A second report from the Commerce Department on Thursday confirmed the economy rebounded in the third quarter after contracting in the first half of the year.
Gross domestic product increased at a 3.2% annualized rate last quarter, the government said in its third estimate of GDP. That was revised up from the 2.9% pace reported last month. The economy had contracted at a 0.6% rate in the second quarter.
The upward revision to GDP last quarter reflected upgrades to consumer spending, business investment as well as state and local government outlays. Domestic demand was also revised higher to show moderate growth instead of being tepid.
But the housing market decline was deeper than previously estimated, with residential investment contracting for six straight quarters, the longest such stretch since the housing market collapse in 2006.
Still, a recession is most likely next year as labor market strength raises the prospect of more rate hikes, further reducing household wealth, which is being squeezed by declining stock market and house prices. Consumers are also running down their savings and a strong dollar will hurt exports. A third report showed The Conference Board's leading indicator, a gauge of future U.S. economic activity, fell for a ninth straight month in November.
The personal consumption expenditures (PCE) price index rose 0.1% last month after climbing 0.4% in October. In the 12 months through November, the PCE index increased 5.5% after advancing 6.1% in October. Another piece of data showed U.S. consumers expect price pressures to moderate notably in the next year, with a benchmark survey on Friday showing the one-year inflation outlook dropping in December to the lowest in 18 months. This is a key number that Fed Chair Jerome Powell mentioned in one of his press briefings.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, edged up 0.1% after surging 0.9% in October. Economists polled by Reuters had forecast consumer spending rising 0.2%. Consumer spending is being supported by solid wage gains, thanks to a tight labor market, as well as savings accumulated during the first year of the COVID-19 pandemic.
Personal income rose 0.4% last month, with wages gaining 0.5%. But higher borrowing costs, fast-depleting savings and diminishing household wealth could stifle consumer spending, and tip the economy into recession next year. Though the saving rate climbed to 2.4% from 2.2% in October, it remains near record lows.
Economists are cautiously optimistic that the Fed would probably not need to raise its policy rate much higher than currently projected, which would result in only a mild recession. Much depends on the labor market.
It is amazingly, guys, how positive everything looks in official reports - spendings are growing, inflation is slowing, GDP is rising etc. But what price stands behind of all these stuff? Recent GDP numbers are hardly reliable. We suggest that data is manipulated and procedure of calculation is adjusted to hide real negative effect in economy. We could judge about real situation indirectly, suggesting that GDP is dropping for 7-8 % a year. Just take a look at this data - GDP can't show 3.2% growth with -0.7% monthly performance on Retail Sales (last week), collapse on Real Estate market and 7% annual CPI.
Besides, we already have mentioned that we have bit doubts concerning GDP Price Index, showing 4.2% inflation with GDP, because GDP consists of services and goods at 65/45 proportion, or even 70/30. If we have Consumer inflation around 7% and PPI above 10%, then index can't be 4.2%.
So, the process of underestimating inflation has not gone away (it is systematically built into the statistical methodology), so the decline in US GDP has continued all these months, although they show us growth of 2-3%, which is totally absurd. The experience of 1930-32, when there was a "pure" structural crisis in the United States, rather evident, shows that the rate of decline in it was about 1% of GDP per month (or about 10% of GDP per year). Accordingly, for almost three years of the crisis, the cumulative decline amounted to about a third of GDP
Based on this analogy and taking into account the scale of underestimation of inflation and active anti-crisis policy, it can be assumed that the decline in US GDP by the end of this year will be somewhere 7-8%. An indirect confirmation was the figure of a drop in monthly retail sales, given in the Research for the previous week.
Besides, what stands on the back of stable consumption - wage rising, explosive consumer loans and burning of personal savings that hits this week all time lows around 2.3%. Wage rising is the same inflation that is an expense and with some lag of 4-6 months it will come into final goods' price.
There is no crisis yet, spending is at its historical maximum, but at what cost? Experience shows that such a method of compensating for lost income does not last more than 1.5-2 years – it started at the end of 2021, so there will be a denouement in 2023.
Bank of Japan adventure
Meanwhile, the dollar was about flat against the yen at 132.49 yen, not far from the four-month low of 130.58 yen touched on Tuesday after an unexpected tweak to the Bank of Japan's bond-yield controls spurred bullish yen bets. The greenback has so far failed to meaningfully recoup the 3.8% slump that followed Tuesday's news.
The Bank of Japan, which widened the trading band for 10-year Japanese government bonds (JGBs) on Tuesday, may have inflicted damage on the dollar against the yen, but Goldman Sachs analysts said there was further room for the greenback to rise.
In Wednesday's research note, Goldman said the path for the yen depended on whether the BOJ move was a technical adjustment as the central bank had pointed out, or the start of a tighter monetary policy regime. Goldman assumed that, for now, the BOJ move was a technical adjustment and a "sign that policy rates could be adjusted further in coming month", although the basic BOJ framework remained unchanged.
In the bank's baseline scenario, Treasury yields will continue to have "more degrees of freedom" than JGBs, noting that U.S. front-end rates "are overpricing recession odds, and underpricing the Fed cycle". This should drive dollar/yen higher over the coming months, Goldman noted. For now, however, Goldman is closing its long dollar/yen position as the market is likely to price in a more meaningful BOJ policy change, which the U.S. investment bank said is a real possibility.
Japan remains the only central bank that has refused to directly tighten policy, raising rates in accordance with inflationary pressure. Abandoning its own initiative, the initiative goes to the market's hands and chaos begins. in other words, the market requires significantly higher rates – this destabilizes the markets.
So what did the Bank of Japan do? He announced a new stage of quantitative easing (QE), raising the limit on asset repurchases to 9 trillion yen per month, at least from January to March 2023. But to fix market inefficiency, the Bank of Japan decided to modify the yield curve, allowing medium- and long-term government bonds to move 0.25 percentage points above current levels, narrowing spreads in the market, in an attempt to eliminate inefficiency.
As a result, rates on 10-year Japanese government bonds have jumped to the maximum yield since 2015 to 0.42%, trading in futures on JGB (Japanese government bonds) has been stopped due to a wave of margin calls, the market has collapsed by almost 3%, the yen is sharply strengthening by 2.8% to level 133 (TOP 10 most rapid phases of yen strengthening in 15 years).
The Bank of Japan didn't want to act sooner? As a result, you will still have to act, but with a delay and with much greater damage to the reputation and stability of the financial system.
There is, in fact, no government debt market in Japan. There is a Bank of Japan market and commercial Japanese banks and pension funds controlled by the Central Bank. The problem is that only the Central Bank has the free liquidity. When the money ran out inside the financial system, the Bank of Japan began to buy up debts, as announced, so accelerating that it bought up more than half of the total public debt. This has had disastrous consequences not only on asset pricing, but also on the structure of the market, which has become degenerate and extremely dependent on ultra-low rates.
Any movement of rates above the weighted average narrow near zero range is an unprecedented shock in the system. That's exactly why the Bank of Japan has not moved the rate so far, because it destabilizes the financial system, which has lost the ability to digest imbalances on its own. All this was absolutely inevitable, because the costs of the Bank of Japan's inadequate policy are the inevitable outflow of capital from Japan at the rate differential between the yen, dollars and euros, to which is added the collapse of the domestic debt market due to lack of demand with all the ensuing consequences.
Rate change was a "least-evil solution" where they had no other options, except, maybe just holding all domestic markets artificially, printing just unbelievable amount of money. Probably they could try, but it was just impossible to provide so much liquidity in so short term. Collapse was inevitable. Taking in consideration how stubborn Bank on Japan was against rate change and QE stop, they could make another step only when they will have to again, not freely. Because any rate change will echo with pain across Japanese economy. We suggest that hardly this is some BoJ cycle and suggest that it is temporal strength in yen, which has limited potential.
Conclusion:
As a result, we could say that although we do not have a lot of news now, but those that we have clearly show the continuation of the structural crisis. Let's repeat once again the basic difference between a structural crisis and a collapse of financial markets: it develops very consistently and evenly, without jerks and stops. This is exactly the picture we have been seeing in recent months.
At the same time, the main direction of the decline may change. It would seem that the recession began only in June — before that, there was no crisis. However, the graph of prices for industrial products (given in the previous review) shows that it was in June that industrial inflation peaked — 23.4% year-on-year. In other words, for the beginning of the summer of the outgoing year, the crisis was showing primarily in rising prices. But when the Fed's policy led to a decrease in inflation, cutting the monetary component of inflation, the degradation processes turns to the real sector.
Similar processes are taking place in other regions of the world, including in the European Union. Observers say that they do not notice a drop in the pre-holiday activity of the population, however, for example, we have shown a comparative analysis of the payments of a small French bakery. Well, the fact that European states are trying to compensate households for rising costs leads to other problems:
The growth of Germany's debt has already exceeded the covid indicators, because of huge compensations and subsidies to the business and population and there is no doubt that this cannot continue for a long time. If we proceed from the scale of structural distortions in the economy, then the scale of the crisis is 1.5-2 times the scale of similar events in 1930-32. That is, the crisis that began in the fall of 2021 may last another 5-6 years, taking into account its slightly slower speed in the conditions of active opposition of state structures. Taking into account the falling capacity of the markets (that is, the reduction in export revenues), the German authorities (and EU) will be forced to reduce household support — with all the ensuing consequences.
Roughly speaking, so far we have passed about 20% of the maximum scale of the crisis, and in some areas (for example, falling household demand) this figure is even smaller. So the dubious pleasure of living in a crisis is still ahead of us for quite a long time. In fact, the situation of the 30s of the last century may repeat.
Technicals
Monthly
Monthly picture mostly stands the same, and the most thrilling moment here is potential bearish grabber. As fewer time left until the end of December as more thrilling situation becomes.
The major pattern that we're watching is potential B&B "Sell" that could start from 1.058-1.075 area. Similar patterns we have on Gold, JPY, DXY, GBP markets. Market has completed minimum requirement conditions to become a B&B - price has closed above 3x3 DMA (not shown) and touched major 3/8 Fib resistance level.
As we already said, theoretically B&B starting point is not limited by only 3/8 Fib level. It could be any Fib level if it has been reached within 1-3 closes above 3x3 DMA. So, if EUR hits 5/8 level of 1.12 within next two months - B&B could be still valid. But...
EUR is overbought on weekly chart. So, chances stand in favor of sooner start of B&B trade here. ECB also hardly will bring any surprises with rate decision.
Possible appearing of the bearish grabber here and uncompleted 0.9 target, could extend B&B to new lows but not only to 5/8 Fib support, which is a minimal target. It might become good setup for taking mid term bearish position.
Weekly
Last week we've mentioned bearish "Stretch" directional pattern here . Also we have a kind of "shooting star" on top. Hopefully this is the beginning of our B&B trade. This week is inside one and has no impact on overall situation:
Daily
Here we once again should use Dollar Index chart as it is more representative. Our 3-Drive is still valid and on Thursday we've got bullish reversal session, although of a small scale. Friday has become an inside session as well. Daily trend stands bullish, so, it means that bearish context on EUR is also valid.
Intraday
As we've said yesterday, the major concern on EUR is sideways action while trend remains bearish on daily chart. Yes, we have some minor bearish patterns here as well, like a grabber, and maybe sideways action is just a result of Holidays. But, situation remains tricky, as potentially it shows signs of bullish dynamic pressure. Anyway, we do not have any clear patterns by far, so, it makes sense to wait for downside range breakout at least:
As always markets become quiet before the Christmas and New Year's Day, and we do not have a lot of news and events with this period. Still, financial life doesn't stop totally and there are still few moments that we need to take a look at - just recall recent BoJ adventure. But I'll try to not bother you too much this time
Market overview
The number of Americans filing new claims for unemployment benefits increased less than expected last week, pointing to a still-tight labor market, while the economy rebounded faster than previously estimated in the third quarter. Initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 216,000 for the week ended Dec. 17, leaving the bulk of the prior week's decline intact, Labor Department data showed on Thursday.
Economists believe that companies are likely to cut back on hiring before embarking on layoffs. Employers have been generally reluctant to lay off workers after struggling to find labor during the COVID-19 pandemic. The claims report showed the number of people receiving benefits after an initial week of aid fell 6,000 to 1.672 million in the week ending Dec. 10, retreating from a 10-month high. The so-called continuing claims, a proxy for hiring, had trended higher since early October.
Despite the recent increases, continuing claims are about 150,000 lower than they were during this time in 2019, which some economists said suggested that the labor market was far from loosening up.
Nevertheless, labor market strength is helping to underpin the economy by generating solid wage gains, which are contributing to higher consumer spending.
A second report from the Commerce Department on Thursday confirmed the economy rebounded in the third quarter after contracting in the first half of the year.
Gross domestic product increased at a 3.2% annualized rate last quarter, the government said in its third estimate of GDP. That was revised up from the 2.9% pace reported last month. The economy had contracted at a 0.6% rate in the second quarter.
The upward revision to GDP last quarter reflected upgrades to consumer spending, business investment as well as state and local government outlays. Domestic demand was also revised higher to show moderate growth instead of being tepid.
But the housing market decline was deeper than previously estimated, with residential investment contracting for six straight quarters, the longest such stretch since the housing market collapse in 2006.
Still, a recession is most likely next year as labor market strength raises the prospect of more rate hikes, further reducing household wealth, which is being squeezed by declining stock market and house prices. Consumers are also running down their savings and a strong dollar will hurt exports. A third report showed The Conference Board's leading indicator, a gauge of future U.S. economic activity, fell for a ninth straight month in November.
The personal consumption expenditures (PCE) price index rose 0.1% last month after climbing 0.4% in October. In the 12 months through November, the PCE index increased 5.5% after advancing 6.1% in October. Another piece of data showed U.S. consumers expect price pressures to moderate notably in the next year, with a benchmark survey on Friday showing the one-year inflation outlook dropping in December to the lowest in 18 months. This is a key number that Fed Chair Jerome Powell mentioned in one of his press briefings.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, edged up 0.1% after surging 0.9% in October. Economists polled by Reuters had forecast consumer spending rising 0.2%. Consumer spending is being supported by solid wage gains, thanks to a tight labor market, as well as savings accumulated during the first year of the COVID-19 pandemic.
Personal income rose 0.4% last month, with wages gaining 0.5%. But higher borrowing costs, fast-depleting savings and diminishing household wealth could stifle consumer spending, and tip the economy into recession next year. Though the saving rate climbed to 2.4% from 2.2% in October, it remains near record lows.
Economists are cautiously optimistic that the Fed would probably not need to raise its policy rate much higher than currently projected, which would result in only a mild recession. Much depends on the labor market.
It is amazingly, guys, how positive everything looks in official reports - spendings are growing, inflation is slowing, GDP is rising etc. But what price stands behind of all these stuff? Recent GDP numbers are hardly reliable. We suggest that data is manipulated and procedure of calculation is adjusted to hide real negative effect in economy. We could judge about real situation indirectly, suggesting that GDP is dropping for 7-8 % a year. Just take a look at this data - GDP can't show 3.2% growth with -0.7% monthly performance on Retail Sales (last week), collapse on Real Estate market and 7% annual CPI.
Besides, we already have mentioned that we have bit doubts concerning GDP Price Index, showing 4.2% inflation with GDP, because GDP consists of services and goods at 65/45 proportion, or even 70/30. If we have Consumer inflation around 7% and PPI above 10%, then index can't be 4.2%.
So, the process of underestimating inflation has not gone away (it is systematically built into the statistical methodology), so the decline in US GDP has continued all these months, although they show us growth of 2-3%, which is totally absurd. The experience of 1930-32, when there was a "pure" structural crisis in the United States, rather evident, shows that the rate of decline in it was about 1% of GDP per month (or about 10% of GDP per year). Accordingly, for almost three years of the crisis, the cumulative decline amounted to about a third of GDP
Based on this analogy and taking into account the scale of underestimation of inflation and active anti-crisis policy, it can be assumed that the decline in US GDP by the end of this year will be somewhere 7-8%. An indirect confirmation was the figure of a drop in monthly retail sales, given in the Research for the previous week.
Besides, what stands on the back of stable consumption - wage rising, explosive consumer loans and burning of personal savings that hits this week all time lows around 2.3%. Wage rising is the same inflation that is an expense and with some lag of 4-6 months it will come into final goods' price.
There is no crisis yet, spending is at its historical maximum, but at what cost? Experience shows that such a method of compensating for lost income does not last more than 1.5-2 years – it started at the end of 2021, so there will be a denouement in 2023.
Bank of Japan adventure
Meanwhile, the dollar was about flat against the yen at 132.49 yen, not far from the four-month low of 130.58 yen touched on Tuesday after an unexpected tweak to the Bank of Japan's bond-yield controls spurred bullish yen bets. The greenback has so far failed to meaningfully recoup the 3.8% slump that followed Tuesday's news.
The Bank of Japan, which widened the trading band for 10-year Japanese government bonds (JGBs) on Tuesday, may have inflicted damage on the dollar against the yen, but Goldman Sachs analysts said there was further room for the greenback to rise.
In Wednesday's research note, Goldman said the path for the yen depended on whether the BOJ move was a technical adjustment as the central bank had pointed out, or the start of a tighter monetary policy regime. Goldman assumed that, for now, the BOJ move was a technical adjustment and a "sign that policy rates could be adjusted further in coming month", although the basic BOJ framework remained unchanged.
In the bank's baseline scenario, Treasury yields will continue to have "more degrees of freedom" than JGBs, noting that U.S. front-end rates "are overpricing recession odds, and underpricing the Fed cycle". This should drive dollar/yen higher over the coming months, Goldman noted. For now, however, Goldman is closing its long dollar/yen position as the market is likely to price in a more meaningful BOJ policy change, which the U.S. investment bank said is a real possibility.
Japan remains the only central bank that has refused to directly tighten policy, raising rates in accordance with inflationary pressure. Abandoning its own initiative, the initiative goes to the market's hands and chaos begins. in other words, the market requires significantly higher rates – this destabilizes the markets.
So what did the Bank of Japan do? He announced a new stage of quantitative easing (QE), raising the limit on asset repurchases to 9 trillion yen per month, at least from January to March 2023. But to fix market inefficiency, the Bank of Japan decided to modify the yield curve, allowing medium- and long-term government bonds to move 0.25 percentage points above current levels, narrowing spreads in the market, in an attempt to eliminate inefficiency.
As a result, rates on 10-year Japanese government bonds have jumped to the maximum yield since 2015 to 0.42%, trading in futures on JGB (Japanese government bonds) has been stopped due to a wave of margin calls, the market has collapsed by almost 3%, the yen is sharply strengthening by 2.8% to level 133 (TOP 10 most rapid phases of yen strengthening in 15 years).
The Bank of Japan didn't want to act sooner? As a result, you will still have to act, but with a delay and with much greater damage to the reputation and stability of the financial system.
There is, in fact, no government debt market in Japan. There is a Bank of Japan market and commercial Japanese banks and pension funds controlled by the Central Bank. The problem is that only the Central Bank has the free liquidity. When the money ran out inside the financial system, the Bank of Japan began to buy up debts, as announced, so accelerating that it bought up more than half of the total public debt. This has had disastrous consequences not only on asset pricing, but also on the structure of the market, which has become degenerate and extremely dependent on ultra-low rates.
Any movement of rates above the weighted average narrow near zero range is an unprecedented shock in the system. That's exactly why the Bank of Japan has not moved the rate so far, because it destabilizes the financial system, which has lost the ability to digest imbalances on its own. All this was absolutely inevitable, because the costs of the Bank of Japan's inadequate policy are the inevitable outflow of capital from Japan at the rate differential between the yen, dollars and euros, to which is added the collapse of the domestic debt market due to lack of demand with all the ensuing consequences.
Rate change was a "least-evil solution" where they had no other options, except, maybe just holding all domestic markets artificially, printing just unbelievable amount of money. Probably they could try, but it was just impossible to provide so much liquidity in so short term. Collapse was inevitable. Taking in consideration how stubborn Bank on Japan was against rate change and QE stop, they could make another step only when they will have to again, not freely. Because any rate change will echo with pain across Japanese economy. We suggest that hardly this is some BoJ cycle and suggest that it is temporal strength in yen, which has limited potential.
Conclusion:
As a result, we could say that although we do not have a lot of news now, but those that we have clearly show the continuation of the structural crisis. Let's repeat once again the basic difference between a structural crisis and a collapse of financial markets: it develops very consistently and evenly, without jerks and stops. This is exactly the picture we have been seeing in recent months.
At the same time, the main direction of the decline may change. It would seem that the recession began only in June — before that, there was no crisis. However, the graph of prices for industrial products (given in the previous review) shows that it was in June that industrial inflation peaked — 23.4% year-on-year. In other words, for the beginning of the summer of the outgoing year, the crisis was showing primarily in rising prices. But when the Fed's policy led to a decrease in inflation, cutting the monetary component of inflation, the degradation processes turns to the real sector.
Similar processes are taking place in other regions of the world, including in the European Union. Observers say that they do not notice a drop in the pre-holiday activity of the population, however, for example, we have shown a comparative analysis of the payments of a small French bakery. Well, the fact that European states are trying to compensate households for rising costs leads to other problems:
The growth of Germany's debt has already exceeded the covid indicators, because of huge compensations and subsidies to the business and population and there is no doubt that this cannot continue for a long time. If we proceed from the scale of structural distortions in the economy, then the scale of the crisis is 1.5-2 times the scale of similar events in 1930-32. That is, the crisis that began in the fall of 2021 may last another 5-6 years, taking into account its slightly slower speed in the conditions of active opposition of state structures. Taking into account the falling capacity of the markets (that is, the reduction in export revenues), the German authorities (and EU) will be forced to reduce household support — with all the ensuing consequences.
Roughly speaking, so far we have passed about 20% of the maximum scale of the crisis, and in some areas (for example, falling household demand) this figure is even smaller. So the dubious pleasure of living in a crisis is still ahead of us for quite a long time. In fact, the situation of the 30s of the last century may repeat.
Technicals
Monthly
Monthly picture mostly stands the same, and the most thrilling moment here is potential bearish grabber. As fewer time left until the end of December as more thrilling situation becomes.
The major pattern that we're watching is potential B&B "Sell" that could start from 1.058-1.075 area. Similar patterns we have on Gold, JPY, DXY, GBP markets. Market has completed minimum requirement conditions to become a B&B - price has closed above 3x3 DMA (not shown) and touched major 3/8 Fib resistance level.
As we already said, theoretically B&B starting point is not limited by only 3/8 Fib level. It could be any Fib level if it has been reached within 1-3 closes above 3x3 DMA. So, if EUR hits 5/8 level of 1.12 within next two months - B&B could be still valid. But...
EUR is overbought on weekly chart. So, chances stand in favor of sooner start of B&B trade here. ECB also hardly will bring any surprises with rate decision.
Possible appearing of the bearish grabber here and uncompleted 0.9 target, could extend B&B to new lows but not only to 5/8 Fib support, which is a minimal target. It might become good setup for taking mid term bearish position.
Weekly
Last week we've mentioned bearish "Stretch" directional pattern here . Also we have a kind of "shooting star" on top. Hopefully this is the beginning of our B&B trade. This week is inside one and has no impact on overall situation:
Daily
Here we once again should use Dollar Index chart as it is more representative. Our 3-Drive is still valid and on Thursday we've got bullish reversal session, although of a small scale. Friday has become an inside session as well. Daily trend stands bullish, so, it means that bearish context on EUR is also valid.
Intraday
As we've said yesterday, the major concern on EUR is sideways action while trend remains bearish on daily chart. Yes, we have some minor bearish patterns here as well, like a grabber, and maybe sideways action is just a result of Holidays. But, situation remains tricky, as potentially it shows signs of bullish dynamic pressure. Anyway, we do not have any clear patterns by far, so, it makes sense to wait for downside range breakout at least:
