The lower level of inflation in the euro-zone was not that surprising, but the strength of the US dollar and the yen is certainly quite impressive.
The yen is a known and veteran safe haven and the US dollar has also been such from time to time. The euro recently positioned itself as a funding currency / safe haven that thrives in times of trouble, but this is certainly not the case at the moment.
EUR/USD is breaking down:
The pair broke down below the the 1.0790 – 1.08 region that supported it in the post-Draghi-disappointment era, since December 3rd to be precise. It didn’t stop at 1.0760 and has already reached a low of 1.0710.
Further weak support awaits at 1.0670, which served as resistance in the past. Much stronger support awaits at 1.0630, which was the top of the post Draghi range.
Below this level, we have the April 2015 low of 1.0530, which was only temporarily breached around Draghi’s speech and then the 12 year low of 1.0460 as the line in the sand.
1.0760 and 1.08 serve as immediate resistance in case of a bounce.
