Bears Make Their Move on EURUSD
Justin Burkhardt | FXFocus.com
Draghi's near constant refrain of doing anything and everything has not had the desired effect of ramping the markets. Instead, both the ECB and U.S. Federal Reserve have fired the shot that signifies the start of the next world war. Rather than bombs and troops, this one will involve the rapid devaluation of currencies that engage in limitless printing.
The half-life of these easing announcements would make Fukishima jealous. Spanish yields have popped back above unsustainable levels. Anti-bailout parties are surging in the polls across Europe. Even a neo-Nazi party is becoming mainstream in Greece. This absolute chaos forces investors to circle back to the underlying question of sustainability. The clock is ticking, and Europe’s fate is set…
Europe’s new mantra has become that of “why just one”? Spain is returning to the table asking for yet another bailout. Of course you will hear the cries of conditions this, targets that… With rampant unemployment and an untenable political position, expect Rajoy to nod his head in acquiescence to the ECB while at the same time ignoring his pledge the very next minute.
What does this mean for the EURUSD in the short, mid and long-term?
After promises of easing to infinity the bears have used the lull in the market to reassert themselves in Europe. The recent rally of the EURUSD has reached a peak of $1.317, which was a 76.4% retracement of the bearish downturn to complete a 2 wave. The pivot in the pair for wave 3 will send shockwaves through the markets bringing back the uncertainties that were so heavily discussed in late July.
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Indicators on Watch
EUR German Consumer Price Index (Wednesday)
EUR German Unemployment Change (Thursday)
USD Gross Domestic Product (Thursday)
USD Durable Goods Orders (Thursday)
USD Personal Consumption Expenditure Core (Friday)