Camilla Sutton, CFA, CMT, Chief FX Strategist at Scotiabank noted the rally in the euro on CPI but explained the technical picture as bearish.
Key Quotes:
"The flash headline estimate dropped –0.6% y/y (consensus was for –0.5%y/y) and core fell to 0.6%y/y, a fresh record low—see chart. EUR’s reaction, rallying from 1.1320 to 1.1360, suggests some positive inflows into EUR and a hesitancy to short EUR from here."
"The bar for further ECB action is likely fairly high; while the risks to the USD side of the equation are increasing. The technical picture has also shifted to a more mixed outlook (the MACD is flirting with a buy signal), it should be seen as a warning of a temporary period of stability in EUR. However, we expect the trend in EUR to still downward throughout 2015."
"EUR/USD short‐term technicals: bearish—but shifting towards neutral. The chart warns of a short period of range trading between the recent low of 1.1098 and high of 1.1423, these levels can serve as support and resistance and a break would warn of further upside or downside pressure."
Key Quotes:
"The flash headline estimate dropped –0.6% y/y (consensus was for –0.5%y/y) and core fell to 0.6%y/y, a fresh record low—see chart. EUR’s reaction, rallying from 1.1320 to 1.1360, suggests some positive inflows into EUR and a hesitancy to short EUR from here."
"The bar for further ECB action is likely fairly high; while the risks to the USD side of the equation are increasing. The technical picture has also shifted to a more mixed outlook (the MACD is flirting with a buy signal), it should be seen as a warning of a temporary period of stability in EUR. However, we expect the trend in EUR to still downward throughout 2015."
"EUR/USD short‐term technicals: bearish—but shifting towards neutral. The chart warns of a short period of range trading between the recent low of 1.1098 and high of 1.1423, these levels can serve as support and resistance and a break would warn of further upside or downside pressure."
