Euro has lost 3.6% in last two months. That's a big move considering how quiet Global financial markets have been recently.
Here's how it happened?
Euro USD Daily Chart
Euro was strong early in the year with solid support at 1.37. Every dip was getting bought. But then 0n 23rd May 2014: Euro broke down below 1.37. It not only broke down below 1.37 but also cracked below 200 dma. Post the breakdown - Euro made two attempts to pullback but failed at 200 dma/1.37.
The Bears took over on second pullback attempt in July and it has been one way down since then.
How Low it can go?
On weekly chart, the support comes at 1.27/1.26. But remember, the main issue is that Euro has broken down and now on every rise, there will be more sellers than buyers. Fundamentally too, things are not looking great for Euro from poor economic growth in Germany to political turmoil in France. There is very low inflationary expectations and worst no sign of revival on horizon.
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers