Euro vulnerability

Intermediate
  • A Euro plunge in the latter part of last week, on Friday driven by very weak German Purchasing Managers’ Index data.
  • Furthermore, the US Dollar has seen broader strength again on Thursday-Friday against many major currencies, after US$ weakness was seen immediately after a far more dovish Federal reserve at their meeting on Wednesday.
  • This has combined to see a very erratic rally and selloff for EURUSD, which initially neutralised an intermediate-term bear theme (for a shift back to a neutral range), but also leaves EURUSD technical risks lower for late March, as we highlight below.

EURUSD risks stay lower

An aggressive selloff Friday through multiple supports as we had flagged in our last report, as low as 1.1276 (to 1.1272), to reinforce Thursday’s plunge that completely reversed Wednesday’s strong rally after the Fed Meeting, to keep risks lower for Monday.

The latter March surge post-Fed Meeting above 1.1420 set a broader range we see as 1.1509 to 1.1175, BUT with risks skewed towards an intermediate-term bullish shift through 1.1509.

For Today:

  • We see a downside bias for 1.1272 and 1.1248; break here aims towards 1.1213/11.
  • But above 1.1341 opens risk up to 1.1390.

Intermediate-term Range Breakout Parameters: Range seen as 1.1509 to 1.1175.

  • Upside Risks: Above 1.1509 sets a bull trend to aim for 1,1570/1.1621, 1.1815/52 and 1.1996/1.2000.
  • Downside Risks: Below 1.1175 sees a bear trend to target 1.1119, 1.1000 and 1.0839.
EURUSD Chart

4 Hour EURUSD Chart

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