The lows dipped just under 1.2100, but the pair is holding up above it for now
The pair finally broke out of the year's "range" and took out the 1 March floor of 1.2155 in trading yesterday. As mentioned on Tuesday here, taking out the 100-day MA (red line) this time around is a little different since euro bulls no longer have a long-term trendline support to lean on for additional backing.
And since the break, the pair also took out a key technical level in the 1.2155 low. So, what's next?
From a technical perspective, this opens up a move towards a test of the 200-day MA (blue line) @ 1.2010 but more realistically it's a test of the region between 1.2000-10 in that case. Standing in between that test though is the 4 January high (resistance-turned-support) @ 1.2089, but it is only a minor support if anything else.
Draghi's speech yesterday is not enough to warrant a move way beyond those levels mentioned above in my view. The technical break of 1.2155 was important, but the ECB is almost certainly not going to back out of a QE exit in June/July right now. They have too much invested in it at the moment.
It's going to take some really soggy economic data points to warrant a larger downside move in the euro in my view. But given positioning data, I reckon that wouldn't really matter if we were to see a squeeze on euro longs. As Adam said in his recent posts, "markets always find a way to inflict the most pain, on the most amount of people".
