The Euro is trading well below the 1.07 level, a twelve years low, and we can only speculate about when parity will become a reality.
Starting with Monday, March the 9th, the ECB (European Central Bank) started buying bonds in its massive quantitative easing program that is bound to bring back inflation and spur growth.
In a similar fashion with what the US did with the last quantitative easing program, the ECB is buying on a monthly fashion, with an open-ended program, €60billion worth of government bonds. This and this alone is enough to push any currency lower on such aggressive monetary easing.
The fact that the Federal Reserve in the United States is about to do exactly the opposite, namely to raise the interest rate, could only accelerate the move lower in the euro related pairs against the US dollar. It is showing a clear diverging path between the two economic powerhouses.
Besides the fundamental reasons listed above, the technical picture doesn’t look good for Euro related pairs either.
The EURUSD is struggling at the 1.07 area, as mentioned above, and even if we see a bounce towards the 1.10-1.12, it should only be a corrective leg of a potential triangle that will likely be sold again.
EURJPY is breaking below the all-important 130 level, and any bounce higher here should only be a reason to sell the pair for what seems to be the first wave extended impulsive move to the downside.
As for EURGBP, the pair is trading currently well below the 0.71 and it seems that it is only a matter of time until we break the 0.70 as the Bank of England usually copies the Fed in the United States, and the cross is in a clear impulsive move to the downside on the higher time frames.
All in all, the Euro as a currency clearly has more room to go as current monetary policies favor more weakness.
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Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
