The past twelve months had been a dismal period for the Euro, particularly against the greenback. From its peak near 1.250, EURUSD slumped to a recent low of 1.120. This decline spans 1,300 bps (basis points) – a huge move in the FX market.
Will 2019 bring about a stronger Euro, especially as the ECB is preparing to pause its QE program?
The past five weeks saw the rate sketch a rough – but clear – base. The pivot low in late October was followed by a sharp drop to 1.12. Most recently, the rate made another dip to 1.130 then staged a 100bps rebound. This prints a clear Head-and-Shoulders base pattern. The question now is whether the Euro can muster a bullish breakout at the ‘neckline’ at 1.140.
If it succeeds in do so, this breaks the pattern of falling lows. Couple with the base formation, watch to initiate a speculative trading buy.
Jackson has over 10 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world largest institutions and hedge funds. Jackson’s expertise include global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research. Jackson has a PhD in Finance from Durham University.