We were looking for a bounce, but its magnitude was a big question mark.
The degree of any technical bounce is a bit tricky. It would take a lot of short covering to effect a meaningful retracement. After all, the ECB is officially trashing the euro to the tune of 1 trillion bucks.
The widely held expectation is that the Fed will “soon” be raising US interest rates, and therefore strengthening the USD — a viewpoint we don’t share, by the way. If we’re right, and US rates remain low or trend even lower, this will put pressure on the dollar and, in return, strengthen EURUSD.
We speculated about whether our next downside target of .9898 might not arrive until later in the year, and left readers with the admonition:
Keep an eye on this critical support here at 1.1210.
That support has since been crushed underfoot by the thundering herd scrambling for the exits. The bounce off the .618 never got above 1.1533 and lasted only 22 sessions.
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