The EURUSD has corrected by over 2,000 pips since it tried to breakout above the crucial 1.4000 level back on May 8th 2014. The EURUSD managed to rally until an intra-day high of 1.3994 marked the end of an advance many forex traders did not understand. Some called for a breakout and potential rally higher while skeptics called for a sharp reversal in price action as the exchange did not warrant the economic picture of the Eurozone against the US.
An expected reversal took place, but was stopped after the EURUSD enjoyed a rally from its intra-day low of 1.3502 on June 5th 2014 and the one day candlestick showed a huge victory for the bullish forex traders in this currency pair. Adding to more bullish calls was the fact that this intra-day low represented a higher low as compared to its previous intra-day low of 1.3478 from February 2nd 2014. Volatility increased and the EURUSD only managed an intra-day high of 1.3676 on June 6th 2014 from where a sharp reversal unfolded.
Once again the EURUSD set a higher low, this time at 1.3512 on June 12th 2014. Once again the bullish forex traders were right about this currency pair which managed to rally. Plenty of skeptics were proven wrong especially after the EURUSD managed to rally to an intra-day high of 1.3700 on July 1st 2014. This represented a higher high and armed with a higher low the technical picture was set for continued upside momentum. Calls for a rally to its intra-day high of 1.3994 increased and a breakout started to look like a potential.
Then there came the European Central Bank which put an end to any speculation that the Euro will move higher and breakout. Export powerhouse Germany and top weapons exporter France were hurt by the strong Euro and covertly favored a collapse of the Eurozone currency which would make their economies more competitive. They applied pressure on the European Central Bank in order to take steps to devalue the Euro. A surprise cut in interest rates by the ECB started a sharp correction as money was flowing out of the Euro.
Two attempts at a reversal rally were destroyed and each time the EURUSD recorded a lower low which pushed this currency pair to lows not seen since 2006. 2015 dropped the EURUSD below 1.2000 and as of today this currency pair managed to record an intra-day low of 1.1850 from where it managed to move higher. Will the third attempt at a rally be able to carry this currency pair higher? Economic data out of the US is not good, but the Eurozone has issues of its own. An ECB on the sidelines could give the Euro a fighting chance.