EUR/USD finally breaks down to the downside today, partly based on Dollar’s strength, and partly on Euro’s own weakness. Even if a 25bps rate hike is pre-committed by ECB in July, and another hike (probably at 50bps) in September, the central bank will certainly lag behind other major counterparts in policy normalization. Latest PMI data also point to heightened recession risk in Eurozone in the second half of the year.
EUR/USD’s break of 1.0339 (2017 low) indicates resumption of long term down trend from 1.6039 (2008 high). Sustained trading below 1.0339 will confirm this bearish case and target 61.8% projection of 1.3993 to 1.0339 from 1.2348 at 1.0090. Parity is also looking vulnerable. This will now be the favored case as long as 1.0488 minor resistance holds.
EUR/CAD also breaks near term support at 1.3383 to resume the down trend from 1.5991 (2020 high). Next short term target is 61.8% rejection of 1.4633 to 1.3383 from 1.3713 at 1.2941. More importantly, the whole fall from 1.6151 (2018 high) is also on track to retest 1.2127 (2012 low).
