The EURUSD appears at risk to recording a fresh multi-year low at 1.1460 while already recording a fresh seven-year low against the GBP at 0.7573 following the ECB finally introducing QE moments ago.
Now that QE has been at last confirmed from the ECB, you would expect the longer-term bearish view on the EURUSD to be further reaffirmed. With the overwhelming majority of forecasts for the Euro largely swaying in a bearish direction, even the most modest of upside gains for the EURUSD are likely to be further capped to USD weakness. As we have seen throughout the past six months, even USD weakness has been temporary. In the most bullish of EURUSD scenarios, the only way I can see this pair reversing is if the Federal Reserve become another central bank to join the surprise train that has been gaining unexpected steam following the shock from Switzerland.
A combination between the continual weak EU fundamentals being showcased alongside consistent US economic performances reaffirming US interest rate optimism should lead to further one-way traffic down the EURUSD charts. After all, the complete divergence between monetary policy and economic sentiment was already leading to this pair taking a nosedive and the divergence has stretched even further now. The potential for political uncertainty in Greece this Sunday would provide a further likely downside risk for the Euro.
Written by Jameel Ahmad, Chief Market Analyst at FXTM.
Follow Jameel on Twitter @Jameel_FXTM
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Source:: Draghi finally provides the QE card