Euro running out of steam
EUR/USD has had negative weighting on it for seven months, and although currency traders are factoring in an increased chance of the ECB implementing a form of quantitative easing, the move is beginning to feel like it has run out of steam. Although not fully factored in, markets will be expecting Mario Draghi to elaborate on last week’s speech and add timelines too. Assuming this happens, a return to the run lower looks likely, however if this does not materialise quickly EUR/USD might have a small corrective bounce.
Economic data releases today and tomorrow are focused on the US side of the equation. Strong US data might not trigger the size of move previously seen as currency traders become increasingly blasé to good US data.
On two occasions in the last month we have seen buyers come in when EUR/USD has dipped below the $1.24 level, and this is beginning to look a supportive region for the euro to continue bouncing off.