The bull run of the Euro particularly against the Dollar, seems to have no end in sight. But that is not the case. Euro has already broken multiple fib resistance levels and made it to new highs of 1.40. There is clamor among European policy makers for a weaker euro currency a midst , what is a misinterpretation of the relative strength of the US recovery, e.g. last week\’s job report. Overnight bank rates (EONIA) already edging higher , which is counter intuitive to the ECB strategy of keeping relatively low rates in the money markets to boost lending. The US Trade report later today, expectation is for the contraction of trade deficit which will further indicate a commitment to policy normalisation and continuation of tapering.
Anaemic eurozone inflation and improvement in Euro PMI Data might fuel Euro stimulus bets. My long term fundamental view favours Euro weakness against the dollar, especially since the technicals also favour a reversal on the downside at 1.40
