The Euro crashed yesterday on the ECB’s meeting. This is the worst 1 day crash since June 2016 (Brexit).
Previous market studies demonstrated that the U.S. Dollar would probably head higher in the next few months and the Euro would head lower, which seems to be happening right now. Yesterday’s EURUSD crash exceeded 1.7% in one day, which is a lot for forex.
Here’s another market study that comes to a similar conclusion.
Here’s what happens next to the Euro when it crashes 1.7% in 1 day (excluding overlapping cases in the past 6 months).
Click here to download the data in Excel.
Notice how the Euro’s forward returns are very bearish. Here are the historical cases in detail.
June 24, 2016
The Euro kept going down over the next half year.
January 22, 2015
The Euro fell for another 2 months.
July 5, 2012
The Euro fell for another 3 weeks.
April 27, 2010
The Euro fell for another 1.5 months.
August 8, 2008
The Euro fell another 2.5 months.
May 31, 2005
Euro trended lower over the next 5 months.
March 2, 2004
The Euro fell another 1.5 months.
March 13, 2003
The Euro fell 1 more week.
July 23, 2002
The Euro fell another 2 weeks and then swung sideways for months.
February 25, 2000
The Euro fell throughout the rest of the year.
As you can see, this is a short-medium term bearish sign for the Euro. And since EURUSD accounts for 57% of the U.S. Dollar Index, this is a bullish sign for the USD.
Pretty much every single case saw the Euro head lower in the next few weeks or months.
Click here for more market studies.