EURUSD: concrete short term scenario

With the ECB being almost solely focused on raising inflation to 2% and recent data showing it is way below their target (and it has in fact dipped), this pair will continue to be under selling pressure, driving it down further. The slide in oil prices will only increase this pressure. Fact is that the euro zone is struggling. Interest rates have been cut to practically zero and ECB president Mario Draghi has explicitly cited bond-buying as a possible tool. Although there is some disagreement on this between ECB members, it is expected that QE in the euro zone will at least be seriously debated as of this week.

The dollar on the other hand has been gaining in strength the last few months with the DXY shooting up to 88.28 last Friday.

This pair is still bearish in the daily as a rising hourly channel again failed to break the daily trend line. I now see it trading within a steep bearish channel and if it respects the upper trend line of this channel, it might break through support, then retrace only to decline further. I would enter the short conservatively, meaning only after break, retrace and subsequent bounce of resistance.

This is a concrete short term scenario, lets wait and see if the pair follows “the script”. EU has been rather moody and choppy lately and market sentiment matters, so beware!