EURUSD is Coiled

After what has felt like an endless five months in this tight range between 1.12/1.15, the EUR now looks coiled for a breakout.

The Bollinger Bands are now the tightest they have been in 20 years. As they represent a 2 standard deviation envelope around a 20 day simple moving average, they are a nice illustration of the unusually low level of volatility we have seen. In addition, the Average True Range, which is a moving average of the daily ranges plus any gaps, is also very near its lows for the last 20 years. The last three times we have had this set-up, large moves in the EURUSD followed. If volatility picks up and we break the recent ranges in the coming weeks, be ready for life to return to this market. The ECB meets tomorrow. Will they finally throw the EUR under the bus? If not now, next meeting? Or, will US bond prices be vindicated by another round of weakness in equities, taking the dollar down with them?