EUR/USD to head back to 1.24? - BBH

Analysts at Brown Brothers Harriman explained that there are several dominant patterns in bilateral US dollar exchange rates.  

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It might be helpful to focus on these as the macro investment climate has become unhinged with the US threatening to escalate the already elevated trade tensions.  

Indeed, the trade tensions, which have contributed to the rise of equity market volatility, have left the currency market largely nonplussed.  

Three-month volatility in the euro (~6.6%), yen (~7.7%) and sterling (~7.7%) are all below the 20-day moving averages (6.9%, 8.2%, and 8.1% respectively).  

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"The same pattern holds true for the Canadian (7.4% vs. 7.6%) and Australian (8.0% and 8.4%) dollars.  

Euro: There are two dominant technical considerations. The first is that the euro has been in a fairly well-defined range since mid-January of $1.2200 to $1.2450. There have been a few exceptions, but the euro has not closed outside of that range in over a month, and then, in early March, it was on the downside. 

The second dominant technical consideration is an uptrend beginning a year ago when it became clear that populism-nationalism was not going to sweep across Europe.  

That trendline drawn off last April's lows and connecting to last November and December lows now is found a little above $1.2250.

The daily technical indicators are less constructive than the weeklies. With the lower end of the range and trendline holding, a bounce toward $1.2375-$1.2400 should not surprise.