[B]EURUSD Long-Term Technical Forecast[/B]
For the first time since May 2005, the EURUSD crossed below and closed below its 12 month average. The rally from 1.1640 is most likely wave 5 within a 5 wave advance from the 2000 low at .8227 but it is still very much possible that wave 5 is in progress. Notice that RSI (13 month) and price peaked together. Major tops are almost always accompanied by divergence with oscillators (rather than convergence). The former 4th wave extreme at 1.4310 is potential support, as is the trendline at current price.
[B]EURUSD Fundamental Outlook/Interest Rate Forecast[/B]
European interest rate outlook took a significant turn for the worse through recent months, and this has coincided with a similarly substantial EURUSD tumble. According to Credit Suisse 1-Year forecasts, markets expect that the European Central Bank will cut rates by a cumulative 30 basis points in the coming year, while the US Federal Reserve is forecast to actually increase Fed Funds rates by 62bp through the same period. All else remaining equal, this provides a fairly bearish bias for the EURUSD pair.
[B]Forex Sentiment and Positioning Outlook for EURUSD[/B]
CFTC Commitment of Traders Report Suggests Euro May Set Short-Term Bottom