High spreads between US10Y - DE10Y and US05Y - DE05Y, Can indicate some more downside risk for the euro.
There is also some hidden divergence marked with green lines.
European money is flowing into less riskier assets, as EU economic forecast have been slashed, while some banks are saying that the german economy is headed for a recession which is one of the largest economies in the EU.
ECB´s ending of QE program have left the Central bank with less tools to stimulate the economy. A restart of the bond buying program will put questions on the politics taken from the CB and will place them in a situation where the market will think that they dont know what they are doing. If they choose to use some tools the only option they have is the "TLTRO" (Targeted longer-term refinancing operations) Which will give the banks some available liquidity to lend money out and push the economie for some growth. The risk of a possible recession in the EU can give some concerns if the CB will raise rates at Q4 2019. A slowdown in the Chinese economy will also affect the EU, as China is one of the biggest importer of the european products.
At the same time IMF downgrades global economic growth, while U.S. economy also saw some downgrade of its growth forecast. I still see the U.S economy performing better than the European.
Holding shorts on EURUSD - adding more at a break of 1.11060 with target at 1.0380 and 1.0600. Hedging from those levels and watching the price before going net long position. Break of these levels could result in a further move down to 0.9600.
Closing of shorts, and entering long positions will be at 1.16700 with target of 1.21300
There is also some hidden divergence marked with green lines.
European money is flowing into less riskier assets, as EU economic forecast have been slashed, while some banks are saying that the german economy is headed for a recession which is one of the largest economies in the EU.
ECB´s ending of QE program have left the Central bank with less tools to stimulate the economy. A restart of the bond buying program will put questions on the politics taken from the CB and will place them in a situation where the market will think that they dont know what they are doing. If they choose to use some tools the only option they have is the "TLTRO" (Targeted longer-term refinancing operations) Which will give the banks some available liquidity to lend money out and push the economie for some growth. The risk of a possible recession in the EU can give some concerns if the CB will raise rates at Q4 2019. A slowdown in the Chinese economy will also affect the EU, as China is one of the biggest importer of the european products.
At the same time IMF downgrades global economic growth, while U.S. economy also saw some downgrade of its growth forecast. I still see the U.S economy performing better than the European.
Holding shorts on EURUSD - adding more at a break of 1.11060 with target at 1.0380 and 1.0600. Hedging from those levels and watching the price before going net long position. Break of these levels could result in a further move down to 0.9600.
Closing of shorts, and entering long positions will be at 1.16700 with target of 1.21300