Everyone was talking about EUR/USD and EUR/JPY overnight, and selling momentum continued into Asian trade where month-end corporate activity brought excitement to a quiet week.

EUR/JPY traded through last night's low to print a new ten-year low at 100.35, while EUR/USD took out stops below 1.29, pushing down to 1.2888. Some of the moves lower in the last 24 hours can be attributed to fundamentals, and some down to technical selling, as the pair tested trend-line resistance off its October 27 high. A break of 1.3065 could have exposed 1.3198 and onto 1.3235, however the euro bears won the battle, with EUR/USD pulling back.
 
Some traders attributed the move lower in EUR/USD and euro crosses on news that the ECB balance sheet had blown out to a new record amount of €2.73 trillion and the price action suggests that this was the catalyst; in retrospect it should not come as a surprise to anyone given the huge injections of liquidity provided by the central banks to Europe's ailing banking sector. However, it seems the market is suggesting that this is a sobering reminder for the bleak outlook for European growth. It is also worth highlighting that the ECB's balance sheet is now 85% of the Fed's, despite GDP in the eurozone being about 80% of the size.

This comment is from Capital Spreads.

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