Fundamental Analysis:

The Euro fell sharply against the strong US dollar on Friday’s trading session ending the week low against all other currencies on board. This was facilitated after dovish comments from European Central Bank President Mario Draghi, who indicated that the economy is moving closer to implementing quantitative easing measures to shore up the euro area economy. The drop in the euro on board came after Draghi warned that inflation expectations were declining to levels that were very low and said the ECB is ready to expand its stimulus program to raise inflation expectations as quickly as possible.


“We will continue to meet our responsibility, we will do what we must to raise inflation and inflation expectations as fast as possible, as our price stability mandate requires of us,” Draghi said on Friday.

“If on its current trajectory our policy is not effective enough to achieve this, or further risks to the inflation outlook materialize, we would step up the pressure and broaden even more the channels through which we intervene, by altering accordingly the size, pace and composition of our purchases,” he added. These are the fundamental dovish comments of President Draghi which caused the sharp euro sell off on board at the end of the weeks trading session.



Technical Analysis:

Weekly bias remains on the downside as 21 and 55 EMA are freshly crossed southward on the 4 hours, daily, weekly and monthly time frames. Also bearish momentum seems to be intact with RSI, SSRC and MACD all signaling a continuation of the bearish trend. However i am expecting some little retracement early in this new weeks trading session, which will provide a better entry for selling the rips. A break of 1.23568 supports will resume the bearish trend and i am expecting a decline to 1.22000 psychological zones in the medium term picture and 1.20442 supports in the long term picture.


Key economic fundamental reports to monitor this week are German Ifo Business Climate, US Prelim Gdp, US Core Durable Goods, German Prelim CPI, Euro Flash Estimate CPI and US New Home Sales.



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