EURUSD Falls Heavily As Bank Of America Warns Euro Nearing Its Top

EURUSD continued to fall. It has fallen more than 400 pips since the last few days. It fell heavily when ECB announced going heavy on its QE this Tuesday. Combine this with USD strength and you can imagine why EURUSD is falling this heavily. Stay dollar bullish, my friends! That was essentially the message from a group of Bank of America analysts who, in a Tuesday note to clients, reiterated their bullish calls on the dollar-yen pair, dollar-euro pair and U.S. Treasurys. Take a look at the following screenshot.

EURUSD H4 Chart

Do you see a strong bearish divergence pattern on EURUSD H4 chart? Well this bearish pattern appeared on the chart early on Monday one day ahead of ECB announcement that it is going to increase QE more. It was a very nice trade with a risk of 40 pips and a reward of 400 pips giving an excellent reward to risk of 10:1. Now as long as ECB continues with its QE expect EURUSD downtrend to resume.

Credit Suisse economists said the comments “significantly reduce the risk of an early ‘tapering’ of [ECB] asset purchases” and that we should brace for another bout of dollar strength against the euro.

Around midday in Europe, the single currency was trading 0.2% lower at about $1.11, and hit a more than two-week low earlier in the day. The euro declined more than 1% against the dollar Tuesday.

“In just over a week we have round-tripped from $1.11 to well over $1.14 and back, and the fun and games might not be over yet,” strategists at Rabobank wrote in a note.

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