Yesterday’s ECB meeting struck a more “Dovish” tone when all was said and done.  The euro market initially reacted to the ECB’s removal of their “pledge to increase bond purchases (QE) if necessary.  The ECB also mentioned that QE is set to run until September of this year.  The euro erased it’s early morning losses and rose to 1.2453 (March basis).  However, during the Q and A session, Draghi lowered his inflation forecasts and further explained that he is ultimately dependent on the incoming data.  So with a “data dependent” Draghi, and slower PPIs and CPIs coming in across the Eurozone region, the euro took that as a potentially “Dovish” signal and erased its gains by nearly 150pts.  We’ve seen a notable slowdown in the incoming inflation data from Germany, and this morning Italian PPI slowed along with Czech CPI slowing y/y.  The euro closed out yesterday’s session at 1.2318, further confirming a “lower high” on the charts and an immediate term bearish set up for the euro.  Based on the slowing incoming European data coupled with the blowout US NFP data this morning (313K jobs created vs 205K exp), we believe the euro could trade back down to 1.2200 in the immediate term (1-2 weeks).

Euro Mar ’18 Daily Chart


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John Caruso

Senior Market Strategist

Follow John on Twitter @JCarusoRJO. John began his career at Wilshire Quinn Capital, a Wealth Management Firm based out of Los Angeles, California. John made his move to the commodity industry at the end of 2005, and began his path at Lind Waldock, at the time the largest retail brokerage division worldwide. John did his undergraduate work at Robert Morris University in Pennsylvania from 1999-2003, where he was a 4 year varsity basketball letterman.  A self-professed “Macro Trader”, John uses a multi-factor fundamental and “quantamental” trading model in distinguishing market cycles based upon the accelerations or decelerations of growth and inflation metrics. His technical and quantitative approach is heavily reliant upon trend and market range analysis via a custom built standard deviation system in helping him make probability-based market decisions. John is an avid reader of all things pertaining to finance, and behavioral economics. Click here to sign-up for John Caruso's Trading Coach Insights. Daily information and insight on all futures marketsin ranging from metals to equities.

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