EUR: Still could not sustain the smallest of upticks - BBH

Research Team at BBH, suggests that even after being down nine consecutive sessions, the euro still could not sustain the smallest of upticks, and so its streak was extended ahead of the weekend. 

Key Quotes

“It is not the US side of the equation.  Europe is looking more and more out of step.  The US, Japan, Canada, and the UK (expected to be signaled by UK Chancellor of the Exchequer in the Autumn Statement in the week ahead) are or will adopt the more stimulative fiscal policy.  The EC continues to insist on austerity, and Germany is not inclined to use the fiscal space that the IMF and ECB claim to exist.”

“Just as importantly, if not more so, the populist-right appeal that has arguably been expressed in the UK and the US heads toward Europe.  Europe is more vulnerable to a rise in nationalism and anti-integration sentiment.  Italy's referendum and Austria's presidential election are the first. The most likely scenario following the probable defeat of the referendum is another caretaker government whose mandate to resolve the conflicting electoral law and prepare for 2018 election.  Austrian's presidency is mostly ceremonial office, but the victory of the populist right candidate would be seen as another sign of the power of that tendency.”

“The euro's 50-day moving average fell below the 200-day moving average on October 24 when it finished the North American session a little above $1.0880.  To reach that level required the euro to violate the uptrend drawn off the January, June and July lows. The 2015 low was in the $1.0460 area in the spring and $1.0525 at the end of the year. These represent the next near-term targets.  Given the speed and duration of the euro's slide, some technical bounce would not be surprising. We note that the euro has not closed above its five-day average since 4 November.  It comes in now near $1.0675.  An intraday move, or close above there would be a preliminary indication of the end of the strong downside momentum.”