EUR/USD finally falls out of range – more to come?

EUR/USD was stuck in a narrow range  throughout February. However, in the penultimate day of the month, the pair finally moves lower and trades at the lowest since January 27th.

The trigger was a  one-two punch from the US: bullish words from Bullard and solid inflation data, that emerged as a winner from a big bulk of figures.

James Bullard, the president of the Saint Louis Fed, referred to both sides of the currency: he said the strong dollar  will only have a marginal effect on growth. And, he added that the  ECB’s QE is likely to push the euro further to the downside.

We have mentioned in the past that once  the Greek story is moved to the back burner, there is still this monetary policy divergence issue which weighs on the pair.

Janet Yellen was perceived as dovish, but she was actually  preparing markets on for a removal of forward guidance in March.

With core inflation at 1.6% and job creation still solid, a  June hike is still on the table.

EUR/USD dropped below support at 1.1270 and reached a low of 1.1237. Further support awaits at the round number of 1.12, followed by 1.11. On the topside,  1.1270 turns into resistance, followed by 1.1373 and 1.1460.

Opinion:  The Case For Cutting Our EUR/USD Forecasts – Goldman Sachs

Here is how it looks on the chart: