Today marks the one year anniversary of the EURUSD 1.0459 low set on March 16, 2015. Over this period the currency has closed within 1.05-1.15 each day except one, which was August 24, 2015 when it traded to a high at 1.1713 and finished the day at 1.1580. The visit above 1.15 proved brief and EURUSD quickly retreated to its 1.05-1.15 range.
What caught my attention today was the current bid at 1.1086 = 50% of the 1.0459-1.1713 range. This comes in a market where divergence in monetary policies was expected to see EURUSD make a run at parity. Well, the Fed has done its part by raising interest rates, although only once so far at a slower pace than many had expected. On the other side, the ECB has done its part by printing money via quantitative easing and cutting rates into negative territory.
So why is EURUSD stuck in a range and trading at the midpoint of that range? This is a question many are asking as it would be easier to explain a range of 1.00-1.10 than being trapped between 1.05-1.15 for a year. Imagine where the EURUSD might be trading if the ECB did not aggressively ease monetary policy?
Whatever the case, EURUSD is currently at a neutral level and needs to decisively break from 1.08-1.12 to expose either side of 1.05-1.15. This is in a year where the Fed is still on track to raise rates, ECB has already eased further but indicated this may be the end of the easing cycle, Brexit vote and US elections loom.
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Jay Meisler, founder
Global Traders Association
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
