Daily Market Update: Has the Euro Overshot?

In today's daily analysis our guest blogger, John Putman II, accompanies us on a 'chart'er tour over the EURO index.

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John Putmann II

 

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ABOUT THE AUTHOR: John Putman II is a full-time trader and managing member at FX Analytics, a third-party research provider focused on exchange rate modeling, economic complexity, genetic programming and distributive computing.

 

 

 

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Many institutional investors were targeting a EUR/USD of 1.20 between Q4 2014 and Q1 2015 with a grind towards near parity by the end of the year, based on current fundamentals and continued pressure from the SNB decision.

The pair currently trades at 1.13124, which is well below initial targets for the quarter and may reflect a bandwagon effect. If the pair has indeed pushed out of its equilibrium range, there may be a regression opportunity here for a pullback to 1.18. Long-term traders will likely get short again at those levels, or even below that, so hanging on for higher isn’t advised.

Euro Index
Euro Index

In my Euro Index I’m looking at a potential reversal in the 14 day trend. I can’t definitively call this a short-term bottom but I am interested in seeing how this plays out. With so much expectation for a continued decline, the real risk this year is to the upside. A stronger European economy or a weaker US Economy in 2015 could result in a sharp correction.

 

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