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EURUSD to drop harder than GBPUSD


Mercury

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I have suggested before that the Eurozone would get hot harder by uncertainty driven negative sentiment on a Leave Brexit result and the Dax certainly seems to be hinting at this just now.  The Euro has fallen as well but has not been nearly as volatile as GBP.  this is not surprising as people have been fixated on GBP but Carney will defend the currency, as much as he can at least and soon the Eurozone will be in more turmoil than the UK.  The issues around Greece, the poor economies and very high unemployment in Spain, Italy and Portugal and lacklustre growth despite unprecedented ECB actions has not gone away and soon unemployed EUer will not be able to travel freely to the UK for work...  But that is all supposition and not news.  What is new is the focus the EU will now be on globally.  With that in mind I have taken the same view as on GBPUSD in that the fall that was already happening may very well now be longer and harder.

 

My long term charts (Monthly & Weekly) show the run down from July 2008.  There is a possibility of an A-B-C retrace pattern (red labels) but I doubt it.  I see the Euro being even weaker than GBP vs the USD long term and a similar short term pattern on the cards.  There has not yet been a Pos Mom Div on Weekly or Daily that would suggest any rally of significance so the trend is down.

 

The Hourly chart is very similar to GBPUSD, as one might expect.  The Wave B may of may not yet be done but the full retrace to the Fib 50% or 62% is the most likely scenario before a major drop in wave 3.  An alternative EW count could have us still int he big picture wave 3 (pink set) but we will see that as the move evolves, either way the next move down, once it breaks the recent lows from 24 June, will run a long way and blast through parity and on to 8600 at least with a final drop to all time lows also then on the cards.

 



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