Euro Moves Far from Brutal

by Ashraf Laidi
Aug 17, 2017 21:18 | 36 Comments

Earlier today, euro suffered a minor bump on the release of the minutes from last month's ECB Governing Council policy meeting, which revealed growing concerns with a possible overshoot in the value of the euro. The full text was as follows: “While it was remarked that the appreciation of the euro to date could be seen in part as reflecting changes in relative fundamentals in the euro area vis-a-vis the rest of the world, concerns were expressed about the risk of the exchange-rate overshooting in the future.” Before we start speculating over when ECB policy makers may start jawboning the currency lower, it is worth reminding the times when the ECB warned over excessive euro strength:

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Euro Moves Far from Brutal - Trichet Intervention Aug 2017 (Chart 1)

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Euro Moves Far from Brutal - Euro Brutal Intervention 17 Aug 2017 (Chart 2)

Secular strength:  EURUSD is up 15% year-to-date, with headline and core inflation at 1.3% and 1.2% respectively. This compares to periods of higher levels of inflation and a secular bear market in the US dollar in each of the above 3 cases. EURUSD's ascent is in in part a result of USD weakness (USD is down against all major 10 currencies year-to-date), the euro is the 2nd strongest currency so far this year (behind the Swedish Krone), which means the strength is broad and secular. The same cannot be said about the euro's performance in 2004 and 2007, when it was surpassed by most commodity currencies.

What does this mean? The combination of broad euro strength so far this year and a rising trend in the core CPI reflects not only expectations of inevitable QE reduction, but also a broad upswing in economic activity and a notable curtailment in sovereign and corporate risk. The currency impact of any verbal intervention would be short-lived.

Comments (Showing latest 6 of 36) View All Comments
frees200, Argentina
Posts: 0
6 years ago
Sep 6, 2018 13:33
ree forex trading signals to buy EUR USD
Free forex trading signals today
buy @ 1.1770
tp @ 1.1840
sl @ 1.1730
FREE forex trading signals today Description
EURUSD is preferred to BUY
And PLACE stop loss at 1.1730 and the 1.1840 level of take profit
analysis of Free forex trading signals
Trend in near term is up and eur usd go down in last week
Trend lines
The EURUSD is testing the medium term downtrend line near 1.1750
Chart pattern today for eur usd forex trading signals
ZIGZAG, Measured move pattern
from few days ago eur usd decline from 1.1730 to 1.1530 which formed zigzag pattern in hour chart
the end of correction pattern zigzag generate buy signals
AB = 100 % CD
Important Support and resistance level today
1.1530 REPRESENTS SUPPORT AREA and buy trading signals
The Relative Strength Index (RSI) give buy signals when the indicator rise above level 30
Candlestick pattern pattern today is hammer in 4 hour chart
Next wave for eur usd expected to be bullish
free forex signals to buy gbpUSD
BUY @ 1.2810
TP @ 1.2880
SL @ 1.2770
free forex signals to buy gold
buy @ 1193
tp @ 1207
sl @ 1186

frees200, Argentina
Posts: 0
6 years ago
Aug 26, 2018 23:31

best free forex signals today for USD JPY
BEST Free forex trading signals Free
sell @ 111.40
tp @ 110.70
sl @ 111.80
best free forex trading signals today Description
USD JPY is preferred to sell on FX market as long as USD JPY trades below the resistance level 111.80
as a stop loss and exit from the deal targeting the 110.70 level to take profit
Free forex trading signals analysis
USD JPY moves in down trend in medium term and in very near term USD JPY formed uptrend wave
Trend lines
USD JPY break out down trend line and start sideway trading
Chart pattern today for USD JPY best forex trading signals
USD JPY finished down ZIGZAG, Measured move pattern and formed current uptrend wave which we expect to end near 111.60 and resume down trend
the current bullish wave RETARACMENT 50 % of down trend
Important Support and resistance level today
111.50 represents resistance level on medium and long term
The Relative Strength Index (RSI)
USD JPY also give early sell trading signal when the indicator decline from level 70 on 4 hour frame
Candlestick pattern
bearish engulfing pattern appear on USD JPY price chart on 4 hour frame and one hour chart
Next wave
expectations from best forex signals refer to bearish next wave

Halifax, Canada
Posts: 0
6 years ago
Jun 15, 2018 5:21
I know this is old thread but the title somewhat I the only one that thinks the move in the EUR/USD today was brutal? Unjustified? Draghi says QE will end by Q4 and ECB will begin to raise rates next year. Plus he also was very positive about inflation, substantial progress, I believe we're his words and I believe he said economy has showed healthy growth....and with these words he got the euro to drop almost 300 points in like 12 hours?? Something doesn't add up. I've heard Draghi speak much more dovish than this, if this is even dovish talk at all, and the euro doesn't react like it possible the ECB could interfere or manipulate the currency? The EU, I'm sure, is not happy with Trump and his tariff threats.Is it possible, the ECB could weaken the euro artificially in retaliation to Trump's trade threats? Making their exports more attractive. Is it possible? Does it even make sense to do that?..... Something doesn't add up. I'm missing something.
london, Finland
Posts: 0
6 years ago
Mar 19, 2018 8:18
Political chaos and volatility returns.

Major triangular consolidation seen across assets
Ashraf Laidi
London, UK
Posts: 0
6 years ago
Nov 28, 2017 0:59
In reply to ryan786's post
Hello Ryan,

Thanks for the comment and apologies for the late reply.

There are no plans for visiting Qatar, but this may change in Q2 2018.


Doha, Qatar
Posts: 0
7 years ago
Aug 25, 2017 9:04
Hi Ashraf, You are really and always so Succinct and meticulous in your has been so useful. Thank you. By any chance, would you ever visit Qatar for any work purpose ?