King Draghi’s risk is a far overbought Money supply as he competes in the stimulative race to the top against the United States. Draghi and the ECB’s higher interest and exchange rate is undesirable if Draghi rescinds the current money supply. To maintain the money supply and stimulus risks lower Wages, Lower GDP for the tradeoff in possible higher Inflation. The Current Account at 22 billion is near deficit and lower Brent prices may see the actual deficit appear.
Higher Inflation and Moey supplies maintains a higher Stock market and a payoff to money market funds and banks but at the expense of higher Wages and GDP for the masses. The United States last time saw 3% GDP was Q2 2006, 11 years and running. Draghi risks the same predicament as his current position is weak. The sledge hammer stimulus policy now comes to a vital cross road.
The analytical question is what would the economic situation look like today if Draghi, Yellen and all central banks observed their 104 year job duty to add and subtract weekly money to the system rather than stimulus. My questions to Draghi is what gives you this stimulus right, what was the overall intended goals because the effects are failures. Central bankers were never seen in 104 years prior but post 2008, they propelled themselves to sit front and center.
EUR/USD. The tops today for overbought EUR are located at 1.1624,1.1594 and 1.1564. At least the ECB offered symmetry for today. Below comes 1.1465, 1.1457 and 1.1406 as the extreme bottom. Longer term shorts must break current 1.1212.
EUR/JPY. Its the longer term averages overbought in EUR/JPY as well as EUR/USD. The longer term must break line to see far lower in EUR/JPY is located at 126.,09. Realistically for today, the extreme bottom is located at 127.92 then the normal bottom at 128.49. To head higher, must breaks are located at 129.44, 129.70 and highest at 130.36. Much resistance remains built into the daily topside for EUR/JPY.
The overall strategy for both EUR/JPY and EUR/USD remains sell rallies rather than attempt overbought longs.