EUR/USD is trading at it’s 9 months low and there is still more downside expected. The recent forex sentiment survey shows that just 27% of the respondents are bullish on EUR/USD. In May, it was 70%. Between May and August EUR/USD has fallen more than 400 pips and is now close ot 1.33000 level which was the low it had made in November 2013. So there are many bulls waiting on the sidelines ready to jump in. So there will be bit of a bounce and eventually the market sentiment will swing to the other extreme. Ari Wald, head of technical analysis at Oppenheimer, thinks the euro will have a bit of a bounce now that it is close to $1.33 per euro, which was its low in November 2013.
Europe is struggling. The GDP figures last quarter were not good. Germany showed a negative GDP growth of 0.3% while the overall Euro Zone GDP growth was only 0.6%. Thinks can get more worse in the short term if the Ukraine Russian conflict escalates. Europe will suffer more economically as compared to Russia.
ECB President Mario Draghi stimulus package is not alluring enough for the bankers. Data last week showed the euro-area recovery unexpectedly halted in the second quarter as the region’s three biggest economies failed to grow. Germany’s gross domestic product fell more than forecast and France stagnated for a second straight quarter. Italy succumbed to its third recession since 2008.