In January 2015, the Swiss National Bank, in a move that took everyone by surprise, decided to remove the then floor of 1.20 in the euro/Swiss franc currency pair exchange rate, despite repeatedly promising to defend that level at all costs and for as long as necessary. Rates literally tanked more than 2,000 pips in a matter of minutes as the franc skyrocketed. Fast forward just a little more than three years...
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.
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).
This week was all about the pound; next week could be all about the euro. The pound’s rally came to an abrupt halt as economic data from the UK disappointed expectations and after the Bank of England Governor Mark Carney warned that a rate rise in May was not a forgone conclusion. The resulting rally in the euro/British pound (EUR/GBP) currency pair initially kept the EUR/USD supported.
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.