22 Dec 2014
EUR on the ropes - TDS
FXStreet (Barcelona) - Shaun Osborne and Martin Schwerdtfeger, FX Strategists at TD Securities, expect the EUR/USD pair to push back to test the 2012 EZ crisis lows at 1.2000/50 in the next few weeks as US strength continues to weigh on the EUR.
Key Quotes
“EURUSD closed weakly on Friday, with spot easing below the early December low to reach a fresh, if marginal new low for this bear cycle. The EUR has recovered a little ground so far today and is trading a shade above the 1.2244 low from December 8th but the broader undertone is soft.”
“Firmer US rates and wider spreads in the USD’s favour (biggest 2-year yield premium since 2006) weighed on the EUR last week, leaving the currency looking rather precariously poised above a major, long-term support zone defined by trend support off the 2005 low at 2.2130 and the 200-month MA at 1.2230 which checked EUR declines at every test since 2005.”
“Having made new lows last week, we think the odds lean towards a push back to 1.2000/50 to test the 2012 EZ crisis lows at least in the next few weeks. But a sustained break below 1.2130/1.2230 would imply long-term technical shift against the EUR we think that would make an extension of the secular decline well into the teens much more likely.”
“The holiday period may make for choppy trading but we think modest EUR gains remain a sell as the US economy gathers momentum and the Fed gets ready for rate lift off while the ECB dithers over additional stimulus measures that are likely to be implemented sooner or later.”
Key Quotes
“EURUSD closed weakly on Friday, with spot easing below the early December low to reach a fresh, if marginal new low for this bear cycle. The EUR has recovered a little ground so far today and is trading a shade above the 1.2244 low from December 8th but the broader undertone is soft.”
“Firmer US rates and wider spreads in the USD’s favour (biggest 2-year yield premium since 2006) weighed on the EUR last week, leaving the currency looking rather precariously poised above a major, long-term support zone defined by trend support off the 2005 low at 2.2130 and the 200-month MA at 1.2230 which checked EUR declines at every test since 2005.”
“Having made new lows last week, we think the odds lean towards a push back to 1.2000/50 to test the 2012 EZ crisis lows at least in the next few weeks. But a sustained break below 1.2130/1.2230 would imply long-term technical shift against the EUR we think that would make an extension of the secular decline well into the teens much more likely.”
“The holiday period may make for choppy trading but we think modest EUR gains remain a sell as the US economy gathers momentum and the Fed gets ready for rate lift off while the ECB dithers over additional stimulus measures that are likely to be implemented sooner or later.”