Question is whether EUR/USD is ready to resume downtrend
everything down to the Aug. ’18 low was impulsive in nature. From August into year-end, the market entered a corrective phase, one that retraced/has so far held 38.2% at 1.1780.
So far none of what has transpired on the recent decline from September has looked definitively impulsive. It’s difficult to chase the trend under these circumstances. For that reason, there’s a risk the index sees one more recovery towards the 1.1780-1.18 range highs. That being said, any squeeze of that kind should be viewed within context of the broader downtrend.
With that in mind, it seems best to either sell the break below 1.12 (range lows) and/or a recovery towards 1.18. Whichever happens first, the target for a C wave from Jan. ’18 is still the same at ~1.0561.
Consider eventually adding bearish exposure either from 1.1780-1.18 resistance or below 1.12. Ultimately targeting ~1.056.
I agree. Europe is slowing faster than the US. Once we get past the doving up Fed it will be all about the ECB being forced to follow even harder.
If there is one rule in Australian dollar investing it is that a falling EUR equals a falling AUD as the DXY takes off:
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
