There is virtually nothing supporting the euro, technically or fundamentally.

A close today below the 2010 low of 1.1877 would be a technical dagger to the euro and clear the way for a test of the 2005 low of 1.1662.

Fundamentally, the ECB is likely 15 days away from announcing sovereign QE and there are few things more bearish than that.

Psychologically, it’s tough to step up to the plate and sell the euro here after a 2000 pip decline since mid-2014 so bears may want to wait for a bounce.

I anticipate any bounce will be relatively shallow but four things could cause it.

  1. The euro is oversold, the daily RSI is down to 22
  2. Euro shorts are a crowded trade with the CFTC net at 152K
  3. The catalyst for short covering may be position squaring ahead of the ECB decision
  4. A larger short squeeze could develop on a lack of QE on Jan 22 but ultimately it would simply be seen as a delay and another EUR/USD selling opportunity

Those are four small factors but in the bigger picture they’re far outweighed by negative technicals and fundamentals.

EURUSD - the only thing not to like is that it may have gone too far, too fast

EURUSD – the only thing not to like is that it may have gone too far, too fast