Richard Perry
Independent Analyst
The euro remains under considerable pressure after the ECB further eased monetary policy on Thursday and the election victory for the Syriza party in Greece will only add to the bearish outlook for the common currency. However the immediate reaction early on Monday has not been all out selling. After an initial reaction lower on Sunday night (Asian trading hours for Monday) the euro has bounced around 100 pips off its low at $1.1098 (remember the long term 100% Fibonacci projection level I spoke about last week at $1.1093). The hourly technicals have shown an improvement with a bullish divergence present on the hourly RSI, MACD and Stochastics. We need to wait for the reaction from the European traders who could come in an smash the euro but for now the rate is holding up. The initial resistance is at $1.1288 which was a reaction high from an intraday rebound on Friday. It would need a breach of this near term ceiling to suggest that a potential technical rally may be building. For now though, with the bigger picture outlook still extremely bearish, we retain the likelihood that the overnight low at $1.1098 will be retested in due course.
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