Euro has been trading as the relatively weaker European majors since ECB reaffirmed it dovish stance last week. The new forward guidance indicated that inflation must projected to be on target 12-18 months away before consideration of rate hike. At the same time, there is no sign of tapering the PEPP program yet and it’s going to last until March next year anyway.
EUR/CHF’s breach of 1.0802 temporary low suggests that recent decline is resuming. Rejection by 4 hour 55 EMA affirms near term bearishness too. Fall from 1.1149 is on track to 1.0737 cluster support (61.8% retracement of 1.0505 to 1.1149 at 1.0751). Downside momentum is so far capped by the medium term channel support. We’ll see if EUR/CHF could accelerate further. below the channel.
EUR/GBP also staged a sharp reversal after spiking to 0.8668 last week. The lack of deterioration in coronavirus infections and deaths was a good sign for the UK, after the so called “Freedom Day”. It’s now possible that corrective pattern from 0.8718 would take another take through 0.8502 support before completion. That is, Euro could continue to underperform Sterling for a little while.
