EUR/USD : Triple Bottom ?

 

Technicals : A EURO triple bottom on a 2 years period is taking shape in the 1.0350 -1.05 area ; in the last 4 weeks this area has been tested 4 times with NO success (green ellipse on weekly chart). On daily chart trend slowly reversed to positive since december and bullish momentum/price do appear (blue lines on daily chart).

The USD post election rally seems to fade , not only against EUR : The USD/JPY is at 114.50 after having hit 118.50 recently. With US inflation and expectations picking up USD real  rates are being pushed further into negative territory.  Relatively speaking European economic data have improved quite strongly recently with continuous job market improving, increased industrial production and better PMI’s. Headline inflation having turned in Europe could trigger the ECB to (start to ) reverse its QE policy, a major factor of last 2 years EURO weakness. On top of that lots of negatives on potential outcomes in Netherlands and France elections seem to have been priced already in the common currency.

EUR/USD outlook starts to improve and the 1.0450-1.0600 might be a good level to buy EUR in USD portfolios / hedge USD in non USD portfolios. i believe one can refocus on targets in the 1.10-1.13 area especially should the 1.0650 50days MA be broken.

A weekly close below 1.0350-1.0300 would retarget the parity (less likely scenario at this stage) .

 

EURUSD 2 Years Weekly Chart

EURUSD 6 months Daily Chart

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