EUR/USD won't bottom out until there is a significant amount of cash wagered on a drop and when people are talking about far distant downside targets. nL2N2WR0RB
This certainly is not the case yet, and a deeper drop that may challenge parity is possible before a bearish situation that is extreme enough to reverse the decline becomes apparent.
EUR/USD's sharp drop has drawn much attention and it is happening because so few expected it, forcing them to adjust.
Big changes in betting, forecasting and hedging are required, which will drive the pair down and EUR/USD is already close to key points like the low traded in the aftermath of the euro zone crisis at 1.0340 - and parity.
Drops below both points have grown likely within a few weeks of the Apr 6 Reuters poll that forecast a rise to 1.1400 in the following year and where no one saw a drop under 1.0500.
Breaks of downside levels of huge importance are likely, and so is a massive swing in betting and expectations with a huge short position and very bearish expectations likely to develop.
When that happens, EUR/USD will base and the likely time for it to occur is when the ECB closes the interest gap with the U.S. at the end of this year.
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