In our November 2015 update [see: Update on EURUSD], we noted that EURUSD had reached a potential bottom at 1.0592.

Today, EURUSD reached a key technical level, completing a Bat Pattern that should see it rebound strongly.  We’ve been anticipating this day ever since DX broke out three weeks ago.

It bumped along for 8 sessions before the ECB finally took action.  EURUSD soared 4.3% in a day.  But, as has so often been the case, Draghi’s actions were severely front-run and resulted in stocks selling off sharply [see: Draghi Disappoints.]

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In fact, EURUSD completed three waves higher which generally corresponded with stocks moving lower in 5 waves.  As we noted at the time, a weaker dollar isn’t that great for stocks — not because of its relationship with the euro, but because it impacts the USDJPY.

And, as we have repeated at least eleventy-billion times, the USDJPY is what really matters to stocks.  In fact, stocks’ recent bounce off the Feb 11 lows were accompanied by a sharp sell-off in EURUSD — which is the opposite of conventional wisdom and, likely, a rude awakening to the central planners at the ECB.Let’s take a look at the bigger picture.  The Dec-Feb corrective rally saw EURUSD bounce out of the falling red channel, only to run out of steam at a backtest of the rising purple channel. It had an opportunity to backtest the broken red channel.  But, instead, it dropped right back into it and through the rising white channel support.

This, by itself, was a bearish move for EURUSD.  It was exacerbated by a drop last night through a TL of support visible on the 60-min chart.I suspect this is part of the effort to prop up stocks more than anything else.  Given that it occurred at the end of the month, I’m naturally suspicious.  In any case, DX is about to run into overhead resistance at 98.895, so a reversal there would correspond with a rise in EURUSD.If TPTB are as desperate as recent actions would indicate, DX could easily be pushed up through that resistance.  Combined with the upcoming UK vote on EU membership, this could really do some damage to EURUSD.