Last week was marked by the FOMC minutes washout, the release of the minutes where the keyword “patient” was absent combined to a slightly dovish rhetoric that said that the Fed was not in a rush to raise interest rates triggered a massive sell off from high frequency trading algorithms on the USD. This move was clearly a flash crash the euro gained more than 4% against the Greenback on this day, its strongest daily performance over the last 15 years according to Deutsche Bank.

USD

Last week was marked by the FOMC minutes washout, the release of the minutes where the keyword “patient” was absent combined to a slightly dovish rhetoric that said that the Fed was not in a rush to raise interest rates triggered a massive sell off from high frequency trading algorithms on the USD. This move was clearly a flash crash the euro gained more than 4% against the Greenback on this day, its strongest daily performance over the last 15 years according to Deutsche Bank. Most of these gains have been erased the following day and that is an interesting piece of information for traders, from a technical prospective it shows us where the major resistance lies in the current down trend which has more potential left (analysts expects the pair to reach parity) and from a fundamental prospective how nervous are the market participants, on one side nobody wants to go against the Fed that is expected to raise its rates but losing faith as its communication is getting more and more confusing resulting in asymmetric risks that are sometimes triggered on such events. EUR/USD peaked to 1.1036 before paring its losses and is now back above 1.0900 at the time of writing while the Dollar index (DXY) is losing some ground but remains above 97.00.

EUR

The single currency was mostly trading according to the FOMC risk event last week despite the strong jump on Wednesday; the overall trend remains intact as the QE should make its effect on a higher timeframe. The jump we have seen was mostly due to the USD sell off resulting in capital inflows supporting the euro. This move is good for the trend, it makes it more “healthy” in a way and allows traders to come back in position as the general market consensus expects the euro to reach parity with the greenback by year end if not before. This week we expect major risk events to impact the euro will come from Mario Draghi’s speech on Monday afternoon, lately most of its interventions resulted in a move lower for the euro the big question is to know if this time will be different. One thing is sure; there is more room for the euro left on the downside.