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 How far will the Euro go in its descent?

The euro opened down in Asia today. It dragged the pound down with it, which has lost 0.5% over fears that British Prime Minister Theresa May could resign. The Sunday Times reported yesterday that there are 40 Conservative MPs ready to sign a letter of no confidence in their leader. Many of them hold her personally responsible for the ongoing deadlock in Brexit negotiations.

Today’s economic calendar is empty, so traders will be focusing on US tax reform, Theresa May, US 10Y bond yields, and stock indices. The euro is a funding currency, so if global stock indices drop, the euro will strengthen significantly.

At the time of writing, the euro is trading at 1.1660. In my forecast, I expect the euro to drop to the 45th degree at 1.1624. The more aggressive sellers are, the higher the likelihood of the price dropping below 1.1580 by the middle of the week. If, this Monday, we see the pair consolidate at around 1.1655 within a range of 30 – 40 pips, we should prepare for a breakout of the upper boundary of the A-A channel.

As far as I’m concerned, the head and shoulders model on the daily timeframe has failed, so I won’t be looking at it any more. The uncertainty over tax reform has changed sentiment towards the dollar. See more economic news for forex in: ""

11/13/17  06:07am

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