The currency market seems to have crossed the Rubicon, and struck the 50 SMAs, at least in EURUSD and USDJPY. This could also be a trend reversal signal for the stock market.
EURUSD fell to 1.21, breaking the support of the 50-DMA and going to the area of 2-month lows. Comments from ECB officials supported the downward momentum in EUR. They noted that there are weapons in the arsenal to pressure the euro exchange rate and that markets are underpricing the central bank's readiness to cut the rates.
ECB easing is positive for European stocks, which may perform better than many other markets on rate cuts and QE expansion. However, it is also a negative for currency pairs with the euro, which can kick-start a more profound correction after the single currency's rise last year. A break below 1.2050 has the potential to open a direct path into the 1.1900-1.1950 area.
