EURUSD: Euro lower – again. (Much) more to come by FX Charts

The dollar didn’t wait for the US jobs data to find its direction on Friday, with Europe sending the Euro sharply lower, to 1.0930, at the open, mindful that the ECB has said that the 1.1 trillion-euro ($1.2 trillion) programme will begin today. The Euro then took another dive once  the data was released, with the strong 5.5% / 295K reading sending the dollar sharply higher against all the majors, pushing the Euro to a new session and trend low at  1.0838, where it closed on its lows and looking very ominously placed for the coming week.It now appears that the word “patient” could at last be removed from the Fed’s statement at this month’s FOMC meeting and thus keeps alive the hope for a June US rate hike, although September is still the more likely timing. The only caveats against this seem to be that although the jobs figures were very good, the average hourly earnings of 2.0% show that wage inflation is far from becoming a problem, while the participation rate fell slightly (62.8% from 62.9%), and the two month net revision was -18K, which may continue to give the Fed some cause for thought before they decide to act.

Aside from the ECB QE programme, this week starts off with the Eurogroup meeting and the EU Sentix Investor Confidence Survey, and comes ahead of some important Chinese data (CPI, PPI New Loans, IP, and RS) due Tues/Wed. There is then a bit of secondary data due through the week, with the major points being the EU CPI and the US Retail Sales, both due midweek. The monthly Retail Sales are expected to show an improvement from their recent soft releases, with February expected to come in at + 0.3%mm, Core +0.5%mm (Jan: -0.8%, -0.9% respectively) and would give the US$ a further boost.

Technically, below Fridays low, would suggest a run to the base of the long term channel at 1.0800 and then to the shorter term channel (below – brown) at around 1.0750, which fits in nicely with the important Sept 2003 low at 1.0759, and may well be a suitable place to trim back some risk in looking for a bounce in order to re-sell.  A break of this level would probably negate the chance of a bounce and would then open up the chance of a run to around 1.0550, where a support line connecting the Oct 2008/June 2010 lows currently sits (monthly chart below). Below this sits the base of the multi-year channel, currently at around 1.0250 which will again be strong support, but once there, the Euro will inevitably want to take a look at parity.

On the topside, the Euro looks as though it is going struggle to regain 1.0900, although the market is very short already and we could see a profit-taking bounce towards the first Fibo resistance at 1.0960 (23.6% of 1.1378/1.0841). Above here is becoming difficult to envisage and we may not reach it again for a while, but if wrong, the next level to watch is at the next Fibo resistance at 1.1045 (38.2% of 1.1378/1.0841).

Stay short – sell rallies still seems to be the mantra. Keep an eye out for EU/ECB soundbites as the QE programme gets under way.

Economic data highlights will include:

M: Eurogroup Meeting, German Current Account, Trade Balance , EU Sentix Investor Confidence Survey, US Labor market Conditions

T: US Wholesale Inventories

W: German, French, Spanish CPI,

T: EU Industrial Production, US Jobless Claims, Retail Sales, Business Inventories

F: US PPI.

Monthly