EUR/USD recap for 09.02.2016
As equity and stocks are dragged to the bottom with a rock chained to their legs, the euro likes this. Managed to brake the daily flag configuration after Dudley stepping in with his dovish non-sense, price broke trough 1.09474, arrived at 1.11191, tested it successfully and the rally continued confidently towards 1.12 and 1.13, finally pushing at 1.13406. As vise-versa, the euro may go down to catch its breath a bit towards 1.11191 as the dollar catches its breath from the sharp selling. We can see similar moves between the euro and gold now and for both assets the current environment suggest more growth for them. Euro's top side perspectives are towards 1.13803 and 1.15127 which is not impossible as I've mentioned because of the current risk-aversion situation. ECB statements and hits on their future policy will have their impact on the euro. Do not forget that ECB wants the euro weak and March is right around the corner when they will unfold another QE. These assumptions and news should have been calculated in-to the price right now and the euro to go down. If this was the scenario, currently the euro had to be at 1.05569 waiting for the events from ECB to unfold. But as mentioned reality is that fear is dominating the markets and central banks are reaching their limits and there are already proofs that standard monetary policy are not working. Yes, BOJ, I am talking about you. This time around NIRP are calculated as a move from the FED and already speculations rise that by 2017, FED will apply negative interest rates. Hard to believe as US economy as showing revival signs, hardened them and even with mixed data, market reacts to the positive news (dollar going up) from the labor market. Last Friday, the negative NFP didn't matter for the market but high wages and dropping unemployment, but dollar's strength lasted so much that it was overshadowed by other, deeper fears for the global economy. Fear thrives greed I guess.
Going long at eur/usd dips is a solid strategy for now. Sentiment for sure is bullish for the pair, stay with the sentiment, but expect any sentiment reversal. As we've seen - sentiment can be shifted in seconds.