The EUR/USD hit 16-month lows on Monday as the price fell to $1.1242 after a combination of events led traders to re-price what may be ahead. Key among the factors were the comments from Mario Draghi that “if things were to get worse, we can always extend the period of time, we can always change our forward guidance.”

Much of the market’s view on EUR has been focused on Quantitative Tightening from the ECB and a possible move out of a zero-bound interest rate policy (ZIRP) in mid-2019. A change from this path compounded by Italian budget problems could keep EUR offered and USD bid.

In other news, crude oil is a headline for all the wrong reasons. Last week, the major energy commodity entered bear market territory prompting OPEC to argue that a cut is necessary only for US president Trump to claim they should not do so as cheapening of oil may be risk positive (paraphrase on my part.)

Lastly, a technical view shows that US Dollar bears should remain wary of jumping in too early as driving forces for a stronger US Dollar remain in play.

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