The euro has been battered over the past five months, declining 10% since May 7 but it’s always darkest just before dawn.
A bounce is long overdue but it needs a catalyst. One thing it has going for it is a bit of seasonal strength, at least recently. Over the past 5 years the average gain for EUR/USD in October has been 1.5% — the best of any month.
The downside is that Sept is the 2nd best month over the past 5 years (and we know how that worked out). Also, if you stretch the seaonsals out to 10 years or beyond, the strength disappears.
EURUSD seasonals for Oct 2014
Verdict: Don’t even think about catching the falling EUR/USD knife unless the ECB gives you a reason.
