Next Leg Lower in EUR-crosses in Focus after Weaker CPI
- EURUSD breaks below key $1.0800 support, now eyes $1.0612.
- See the March forex seasonality report for trends in the QE-era.
Short-term technicals are realigning with longer-term bearish inclinations across the EUR-complex. EURUSD's H4 MACD and Stochastic bearish crossovers have appeared alongside price losing its uptrend from the March 15, 19, and 27 lows, as well as the March 27 swing low. Likewise, EURGBP and EURJPY have moved below the significant swing lows put in late last week, signifying a broader resumption of the Euro downtrend.
While the is an atypical week - month-end and quarter-end rebalancing effects today, capital redeployment tomorrow and Thursday, and market holidays on Friday with alongside US Nonfarm Payrolls (which has only happened 11 times since 1980) - it's difficult to ignore the significance of prices across the EUR-spectrum realigning with their longer-term trends.
At a minimum, today's data helps the market refocus its view to the longer-term perspective that the ECB's QE program is a necessity, and that there is a growing divergence between prospective ECB and Fed monetary policies for the next 12-18 months. See the Euro weekly trading forecast "Euro Relief Rally May Hit Wall as Market Refocuses on EZ CPI, US NFPs" for a more in-depth outlook.
See the above video for technical considerations in EURUSD, EURGBP, and EURJPY.
--- Written by Christopher Vecchio, Currency Strategist
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