Rising wedge apex confluent at multi year descending triangle, 618% retrace confluent around same region also corresponding with previous support turning resistance - RSI forming regular bearish divergence whilst two weekly bearish harmonics form - bearish crab (yellow) & bearish butterfly fractal (red)
ECB will likely express caution around EUR exchange rate, DXY poised for swing up (likely it's final one for this current business cycle) whilst focus will gradually shift over to potential March Rate Hike from FOMC. Allowing for USD to firm up modestly, pushing this pair down to around 1.16-1.19. Then as September nears and the end of ECB APP is signalled, a long term higher low forms and a break of this multi year bearish trend ranging back from 2008
Historically, USD depreciates during a tightening cycle. This time is hasn't of a YET with Europe, Japan & UK converging with the FOMC on it's tightening path and we're seeing global synchronised growth. Capital flows will pile into Europe, the correlation between higher US yields & USD is already breaking down - a prescursor for whats yet to come & considering the DXY long term bearish trend and historical depreciation in tightening cycles, post Q2/Q3 downside risks for the DXY are considerable. Upside for EUR significant. SO a long DXY position play for a few months as this allows for a higher low to form (transition from 9 year bearish trend to bullish) & DXY to form a lower high & continue to the downside below 88
Target around 1.16 for now, short on break below rising wedge support, possible retest of descending trendline. From 1.16, personal expectations are for EUR to close out year above 1.26 provided external shocks to the economy do not materialise.
ECB will likely express caution around EUR exchange rate, DXY poised for swing up (likely it's final one for this current business cycle) whilst focus will gradually shift over to potential March Rate Hike from FOMC. Allowing for USD to firm up modestly, pushing this pair down to around 1.16-1.19. Then as September nears and the end of ECB APP is signalled, a long term higher low forms and a break of this multi year bearish trend ranging back from 2008
Historically, USD depreciates during a tightening cycle. This time is hasn't of a YET with Europe, Japan & UK converging with the FOMC on it's tightening path and we're seeing global synchronised growth. Capital flows will pile into Europe, the correlation between higher US yields & USD is already breaking down - a prescursor for whats yet to come & considering the DXY long term bearish trend and historical depreciation in tightening cycles, post Q2/Q3 downside risks for the DXY are considerable. Upside for EUR significant. SO a long DXY position play for a few months as this allows for a higher low to form (transition from 9 year bearish trend to bullish) & DXY to form a lower high & continue to the downside below 88
Target around 1.16 for now, short on break below rising wedge support, possible retest of descending trendline. From 1.16, personal expectations are for EUR to close out year above 1.26 provided external shocks to the economy do not materialise.