Eurozone deflation concerns abound, with the EUR/USD hitting a fresh twenty-five month low this morning.
The daily chart below details the slide, with current supply levels in the ~$1.27 range. Though one look at the chart makes you think a token bounce is nigh, thus far, there is no sign of a reversal.
The reason for the rapid decline is in recent months is deflationary data from the Eurozone. GDP growth is about to turn negative and CPI (not shown) is at a new low.
With no clear recourse like QE available yet, the best bet for the monetary authorities is to devalue the Euro, in a hope to spark some inflation / make the currency more competitive globally.
How does this affect US markets? Thus far there hasn’t been much negative followthrough on US equity markets from the strong dollar / weak euro dynamic.