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Monday, 12 May 2014

Euro may fall now

For months the Euro has been rising. It has now (should I say "perhaps?") reached the summit of its climb and the top of the graph has flattened out. The European Central Bank ("ECB") is concerned with deflation, or at least insufficient inflation, in the Euro Zone ("EZ"). If the Consumer Price Index ("CPI") fails to rise, interest rates may be reduced again in June, one effect of which will be to reduce the price of the Euro against the dollar. Already, there are technical indicators  that hint of an imminent decline in value of the Euro, without actually waiting for the ECB action, as the following chart from shows. Click on the graph to read the arguments of its author "Sforex."


Note, of course, that over the last few days the Euro has dropped from its high to the bottom of its range, hitting the blue Support Line in the above chart. There is a high probability that it will bounce off this line, back to its previous height (but, I would say, no higher), before tumbling down.

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