So, the euro is recovering, isn’t it? Well, perhaps not for too long. The general downtrend seems to be intact.
The team at Dankse explain why more losses are awaiting EUR/USD:
Here is their view, courtesy of eFXnews:
“We have been forecasting EUR/USD to fall in H1 and bounce in H2. That is still our base case. The strong US February non-farm payrolls figure supports our call that the Fed will hike in June; this has yet to be priced in, driving further USD strength. We are bullish on European GDP growth, forecasting it to rise to 1.5% in 2015. However, this is unlikely to help the EUR before the ECB has been successful in fighting deflation. We expect diverging inflation and monetary policy will drive EUR/USD lower over the coming 3-6 months. We are reviewing our EUR/USD forecasts in light of recent developments.
Clearly, short EUR/USD positioning has increased in recent days following the collapse in spot, but we do not see positioning as hindering more EUR/USD losses.
Technically, the break below the 61.8% Fibonacci retracement of the move from 0.8228 to 1.6040, at 1.1212, opens the door for further losses ahead of 1.0071.
Psychologically, parity at 1.00 attracts.”
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