Today’s economic calendar signals that the recent move in the Euro has stretched its limits; Business Confidence data from all regions and most importantly the German Ifo read missed while Case Shiller Housing, Consumer Confidence and New Home Sales all beat expectations in the United States.
Just a couple of weeks ago, the dollar was languishing in the doldrums. This was in part due to that disappointing US jobs report which helped to lower expectations for aggressive rate hikes from the Fed and partly because of trade war concerns. Well, since then, the markets’ expectations over short-term rate rises have been on the rise again as geopolitical tensions abated and incoming data has been mostly positive.
My “Euro on the go!” headline last week preceded the euro’s trip to nowhere—except deeper into the three-month narrow-range to prepare for its faster-and-farther fireworks fugue to a crazy breakout price! The reverse of the current situation will be too much price in too little time. Let’s review some euro charts to see if a 50-day expiration long overhead call spread and a long 1.225 single put (weekly 20-simple moving average) make sense (see the charts below).
Today was a win for the euro bulls. The currency started the session on its backfoot, topping at the European open before seeing bad Italian CPI and the worst German Sentiment data since 2012 which led to a poor read on Eurozone Sentiment.