The euro lost a lot of ground against the dollar, and we’re reporting quite a few breaks to multi-year lows. Yet it is also marking a big and conclusive break on the long term charts.
The team at Citi explains:
Here is their view, courtesy of eFXnews:
The December close saw unequivocally bullish technical developments for the USD and this was particularly seen in EUR/USD, notes CitiFX.
“EURUSD remains firmly in a downtrend and has posted a monthly close below the 200 month moving average (1.2234). This is the first monthly close below the moving average in over a decade, constituting a serious bearish development and suggesting further material losses in 2015,†Citi clarifies.
“Our EURUSD outlook also follows closely the pattern seen into the end of 1998 and the subsequent move in the first half of 1999 . That would suggest that a move towards 1.10 in EURUSD in the first half of 2015 is very possible,†Citi projects.
“For only the 2nd time in the history of floating exchange rates we are looking at a bearish outside YEAR in EURUSD. If we were to see a dynamic similar to the above next year it would suggest that EURUSD could trade below parity before the end of 2015,†Citi argues.
In terms of support levels below the 200 month moving average which may be relevant in the near future, Citi points to the 2005 low at 1.1640.
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